Accounting or accountancy is the systematic process, measurement, and communication of financial data concerning non-financial entities including corporations and businesses. Financial accounting methods are generally applied in order to obtain information that impacts an entity’s performance and financial profile. In fact, there are different types of accounting methodologies and systems, each with different purposes, designed for a particular purpose, whether it is to provide decision makers with information relevant to the preparation and implementation of internal control measures and business strategies, or to monitor the financial performance of a company.
There are three general areas in which accounting perform its vital role in decision-making: general ledger, statement of accounting, and journal of account. General-ledger accounts provides information relevant to day-to-day operations and transactions; statement of accounting presents complete financial information relevant to the preparation of the annual income statement and the reports prepared by management; and journal of account is a special type of book used in the preparation of accounting reports. All of these accounts are essential to comply with various accounting standards.
There are many kinds of accounting systems and methods that an accountants may choose from. The most common ones include the single-entry and double-entry accounting system, which accountants use to record the daily transactions and events occurring in the financial transactions of a particular company. Single-entry accounts has similarities with the single-owner system wherein the accountants only needs to key in the transaction details; the difference is that the owner is protected from fraud, whereas the owner is not protected when an audited transaction occurs. Double-entry accounts is more complex than the single-entry accounts because the double entry system includes more than just the transaction details. Double-entry accountants may require additional information, including the balance of the account, its daily sales amounts and costs, its net worth, and its capitalization.
The main goal of accounting is to provide managers with timely and accurate financial reports, which will help them make effective decision regarding the business operations. The reports presented by an accountant should be prepared in such a way that it provides the basic information needed by managers. It also needs to present figures and data in a clear and concise manner so that readers can understand the data. When these facts are presented in a logical manner, the readers will have a good picture or understanding of the financial situation of a certain business. Accountants are required to comply with several laws in order to preserve, protect, and further the financial character of a certain business.
In United States, the major groups of accountants are public accountants, private practitioners, chartered accountants, mortgage bankers, insurance underwriters, bank examiners, financial planners, investment advisers, mortgage brokers, compliance officers, management consultants, litigation lawyers, tax attorneys, forensic accountants, and government accountants. In Canada, the main groups of accountants are Chartered Certified Accountants, Institute of Chartered Accountants of Canada, Private Planners, Financial Market Technicians, and Business Intelligence Specialists. In Japan, the most commonly used accounting method is the International Standard Book of Accounting (ISCA). For further details on accounting, the names of specific countries can be found online at the Accounting Learning Center.
Although many people may not be aware of it, there are differences between the accounting practices followed in the United States and Canada. Both countries have their own set of rules regarding the preparation and submission of financial statements and reports. The Canadian tax regulations and Accounting Principles are slightly different than those in the United States. This difference was made to simplify the collection of income tax and make the filing of income tax more convenient. There are accounting consultants who offer advice concerning all matters related to accounting and the preparation of financial statements and reports.