Role of Accounting in the Company

accounting

The company is an agency that does good business to produce goods and services consumed by the community which aims to make a profit or gain as much as possible.

Every good company trading company, service, or manufacturing companies certainly do transactions. Any transactions that take place within the company must be properly recorded and properly fit the existing evidence.The process of recording the transaction is referred to as the accounting process or accounting cycle.

Accounting is the measurement, translation, or provision of assurance about information that helps managers, investors, tax authorities and other decision makers to make resource allocation decisions within companies, organizations, and government agencies. Accounting is the art of measuring, communicating and interpreting financial activity. Broadly, accounting is also known as the “language of business”.

Accounting aims to prepare an accurate financial statements that can be used by managers, policy makers, and other interested parties, such as shareholders, creditors, or owners.Daily records involved in this process is known as bookkeeping. Financial accounting is a branch of accounting where the financial information of a business is recorded, classified, summarized, interpreted, and communicated. Auditing, a related discipline but remains separate from the accounting, is a process whereby an independent examiner review the financial statements of an organization to provide an opinion or opinions – which makes sense but is not guaranteed to be completely – about the fairness and compliance with generally acceptable accounting principles.

Evolution in information and communications has driven advances in technology. Increasingly tight competitive world of business, always adapting to the changes that occur by improving the company’s strategy and operations. Accounting information to be one element in a company’s decision making. The ability to run a business without being followed by the application of appropriate accounting information system will enable the company to experience problems in the future with the growth of their business.

Accounting report or the financial statements referred useful for the company – in which interested parties, such as:

a. Investor 
Investment risk and their advisers are concerned with the inherent risks and the outcome of development investments they do. They need accounting information to help determine whether to buy, hold, or sell such investments.Shareholders also interested in the accounting information that allows them to assess a company’s ability to pay dividends.

b. Employee
Employees and groups – groups that represent them are interested in information about the stability and profitability of the company. They are also interested in information which enables them to assess the company’s ability to provide fringe benefits, post-employment benefits, and employment opportunities.

c. Lenders 
Lenders are interested in financial information yag allow them to decide whether seta loan interest can be paid on the due date.

d. Suppliers and Other Business Creditors
Suppliers and other creditors are interested in business with accounting information that allows them to decide whether the amount owed will be paid at maturity. Creditors interested in the company’s business in a shorter period than lenders unless as their main customers rely on the company’s survival.

e. Customer
The interested customers with information about the viability of the company, especially if they are involved in a long-term agreement with, or depending on the company.

f. Government 
Government and various agencies under his control are concerned with the allocation of resources and therefore concerned with the activities of the company. They also need information to manages the company’s activities, setting tax policy, and as a basis for preparing the national income statistics and other statistics.

g. Community
Affect members of the public companies in a variety of ways. For example, the company can provide a significant contribution to the national economy, including the number of people employed and protection to domestic investors. The financial statements can help the community by providing trend information (trends) and recent developments as well as a series of activities prosperity.

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