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The Role Of Accounting On Business And Our Society

1261 words - 6 pages

The Role of Accounting on Business and Our Society
Angel Ramos
Professor Darlene Green-Connor
ACC 100: Accounting I
March 2, 2014

The Role of Accounting on Business and Our Society

There are many decisions that companies make every day in order to be in business as well as to ensure it continues to stay in business. If in retail, such examples would be to extend its inventory or cut back on an item, place certain product on sale or on clearance, or even if it would be better to relocate or sell the company. Before making any of these decisions, management and the decision makers need to know how the company is doing. There are valuable key point indicators that can help in the ...view middle of the document...

This statement reports what actions are being taken as far as investments and withdrawals. It displays the Owner’s Capital for that specified time period and answers why it has increased or decreased.
Balance Sheet
Unlike the other statements, the Balance Sheet is captured at any period in time instead of time. It shows how the company is doing at this precise moment. It shows the assets along with its liabilities. It shows how much it has made as well as how much it takes to continue to operate and its debts. It answers the where they are now in the overall economic position.
Statement of Cash Flows
As it is clearly titled, the Statement of Cash Flows shows the direction in which the cash value of the company is going. It shows what is being bought, how much was made and what is being paid during a specified period of time.
Out of all four statements, the Income Statement is the most effective in communicating the financial health of an organization. It provides the view from the economic standpoint of being able to remain in business and in competition. The other sections have components that are influenced by the decision makers such as its investments made during the time period or withdrawals taken. The Income Statement shows the true assessment of the company in its operational value and net worth.
Learning the value of these reports and how to interpret them let alone keep them is one of extreme importance to a company. Not all executives can put a financial statement together although they should all know how to interpret it. This is the importance of hiring an accounting profession.
Some companies hold positions for accounting as well as hire certified public accountants. The accounting positions within the firm do not usually have to hold any certification or degree level of education to hold their station. Their main focus of employment may be in the capturing of the reporting information, bookkeeping or simple tax-related matters. Certified Public Accountants (CPA) attends additional training and certifications before being able to receive the designation of a CPA. They hold more complex duties such as forensic accounting, audits and international tax management. These roles and positions are vitally important in our economy from a society and global perspective. They maintain the integrity of the business acumen as well as maintain its confidence on the reported results to its shareholders. They may even grow further in their counseling roles as trusted advisors. “Promote the CPA as the trusted advisor who, in addition to providing core CPA services, develops solution to complex problems by integrating knowledge, expertise and resources from multiple disciplines” (Hartstein, p36).
It takes a lot of decision making and analysis to ensure a business prospers. Forming and understanding financial statements are very important if not vital in those assessments. If I were to...

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