Assignment 1: The Role of Accounting on Business and Our Society
ACC 100 – Accounting
The Role of Accounting on Business and our Society
Accounting is an essential part of modern business. From the smallest start-up to the largest fortune 500 hundred company, accounting is how business growth, contraction, or direction is determined. When entering the accounting world you will be required to deal with the four financial statements, the balance sheet, the income statement, the statement of cash flows, and the owner’s equity statement. The purpose of the balance sheet is to reveal the economic/financial position of the company at a set point in time. The balance sheet ...view middle of the document...
A CPA may work as an auditor or prepare taxes. CPAs can also represent their customers before the IRS. CPAs can work in environmental, forensic, or international accounting (Hartstein, B. D. (2013). The importance of accounting comes from the analysis of information that they gain from studying a business’s financial statements. Accountants can resolve financial discrepancies and irregularities that a company might have and they can also recommend alternate methods to use resources in order to increase efficiency. The downside of accounting is that it gives people outside of the scope of the business access to the company’s information that can be used for criminal activity such as embezzlement.
There are a few key differences when comparing a merchandising company to a service based company. Service companies identify revenue when the business completes the service for the client. In most cases, the business charges the client on an upcoming date to request compensation. Merchandising companies commonly gather compensation from clients when the client takes the goods from the store. The merchandising company identifies revenue on the date of sale. The income statement layouts vary between service companies and merchandising companies. The income statement for the service business deducts the operating expenditures from the revenues to reach net income. The merchandising business deducts the cost of merchandising from the revenue to reach gross profit. It then deducts all...