The Importance Of Accounting In Accounting

Great Essays
Accounting can be a wonderful thing, once you look past all of the debit and credits that have to be balanced, and all the balance sheet. It can let us explore a world that not many people tend to travel to. A place where the world is ours, and all we have to do it grab it by its hand and start the journey. Where we can truly be our own boss. Where we can control everything that goes on within the business. To raise a business from the ashes, to a business that no one else can compete against. This is push to come to shove to show how we can stand out from the crowd, and how we will come out standing out on top of the world. Within a business, there are many important assets that come with running a business. From buying and selling the merchandise …show more content…
The cash can be received as an account receivable which is the right to receive cash from the customer in the future. Usually, account receivables are collected rather in a short period of time. Next is notes receivables, they represent a written promise that the customer will pay a fixed amount of principle plus interest by the maturity date. The maturity date is the by which the note is due. The written document will serve as evidence of the debt. The notes receivable usually take more time than it does with account receivables though. Then there are other receivables. These are just a makeup of categories that include any other type of receivable where cash will be received in the future. Business receive checks and online payments so it is important to have internal control to watch over the assets. On the balance sheet the accounts receivable are reported as current assets. However, there is always a chance that the receivable will never paid in the full amount or at all. So it is important that an estimate be made up for the amount that is unlikely to be collected. What this report does is it reports it as a credit balance in a receivable account such as an allowance for doubt able …show more content…
They are tangible assets that can be used to produce revenue in the operation of the business. They are often called Property, Plant, and equipment or fixed assets. Some examples of plant assets are buildings, land, furniture, and equipment. Compare to other assets, plant assets are unique because they are a long term asset. This means when a plant asset are purchased its expenses aren’t immediately recorded. This is because the cost of the asset will be recorded over the period of time the asset is expected to be used. This can also be called depreciation, the process which a business spreads the plants assets cost over its useful life. This however, doesn’t apply to land. It is not recorded due to the fact land doesn’t decline when it used. When finding the deprecation you would have to use the matching method principle. This ensures that all of the expenses are matched against the revenue during that

Related Documents

  • Great Essays

    The Firm Chapter Analysis

    • 3254 Words
    • 14 Pages

    Jack describes a few of the office outings The Firm would participate in, such as an annual golf outing hosted by The Bear. He also describes how his wife was introduced to him by a coworker, and tells of taking her to the office Christmas party. These stories from Jack describe the aspects of an office that can’t be taught in a classroom or textbook. Jack’s stories of the office parties and outings show a student that there is more to an office than just auditing and tax work. It is important to have a relationship with your coworkers because in the accounting industry you must work as a team and have each other’s back.…

    • 3254 Words
    • 14 Pages
    Great Essays
  • Improved Essays

    Receivables Case Study

    • 2923 Words
    • 12 Pages

    In distinguishing between sales and collateralized borrowings using receivables, the critical issue A) is whether the terms regarding the transfer were initiated by the transferor or transferee. B) is whether the transferor surrenders control over the receivables. C) comes down to how clearly the rights, etc. being retained are specified in the transfer agreement. D) is whether any gain or loss related to the transfer is recognized in earnings.14.Reasons why companies might accelerate cash collections include the following except: A. B. Generally accepted accounting principles permit "off-balance sheet" treatment of factored receivables and collateralized borrowings, thus enabling management to "window dress" the company's financial position. C. D. A)…

    • 2923 Words
    • 12 Pages
    Improved Essays
  • Improved Essays

    The term “small business” is a term that is often related to “mom & pop” shops, but what people don’t realize is that small businesses make up more than 99.7% of all employers (Hatten, 2012). In the service industry alone more than 71% of companies are small businesses. As it is true that most “mom & pop” shops are small businesses, some are just people who are self-employed, and some are entrepreneurs. Self-employed people can be entrepreneurs just as small business owners can, the difference between the two would “be the desire and ability for growth,” (Shelton, 2013). Small businesses make up a large portion of the revenue that goes into a community.…

    • 466 Words
    • 2 Pages
    Improved Essays
  • Improved Essays

    Accounts receivable analysis requires many different points of data in order to be sufficient. Required data includes payor information, patient information, billing information, registration information, and date limitations. Analysis must be performed based on the financial class of each payor, where financial classes vary by organization. The financial class system categorizes payors into contract generalization terms. Financial class 1 or 2 is considered Medicare services, where financial class 3 or 6 is considered Medicaid services.…

    • 486 Words
    • 2 Pages
    Improved Essays
  • Improved Essays

    The ACCT 6120 course helps us learn how the company is governed. The lecture and tutorial introduce and recap a series of accounting, corporate law and auditing theories and practice with a specific case in each class to analyze how the theories apply, which could better help us understand the theories as well as thinking more critically. Before studying this subject, we all think as an accountant, the corporate governance is a little bit far away from us. However, through the content of each week, from the principle conflict to sub-committees and finally CSR, the core of the issue is the accounting information. The accounting information is the incentive to drive the management of company to take some actions, for example, earning management…

    • 939 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Health care organizations are known to value assets on their historical or acquisition costs. What types of asset valuation methods are useful for finances, stocks, bonds, tax returns, and financial statements? Response 5 As a potential CFO, valuing assets is a crucial need for not-for-profit health care organizations (NFP). A well-managed health care organization with auditors, management, and CFO would ensure the assets, stocks, bonds, tax returns, and financial statements are being valued thoroughly and accurately.…

    • 1815 Words
    • 7 Pages
    Improved Essays
  • Superior Essays

    Chico's Fss Inc

    • 1424 Words
    • 6 Pages

    Amy Gabriel October 14, 2015 Intermediate Accounting- Case #1 Chico’s FAS, Inc. is a retail company that encompasses four brands: Chico’s, White House Black Market, Boston Proper, and Soma Intimates. The company earns revenue through the sale of women’s clothing and accessories in stores and online. Chico’s defines the critical accounting policies that they use to explain any discrepancies between the dollar amounts on the financial statements and the actual cash amount to its Audit Committee and Board of Directors (Chico’s FAS, Inc. 10-K).…

    • 1424 Words
    • 6 Pages
    Superior Essays
  • Improved Essays

    They therefore measure how efficient Best Buy and Amazon are in using its resources. The most common asset accounts are accounts receivable, inventory and total assets. Accounts receivable is the total amount of money due to a company for products or services sold on an open credit account. The accounts receivable turnover for Best Buy stood at 45.2% in 2015 compared to Amazon’s 54% .This shows how quickly Best Buy collects what is owed to it compared to Amazon and indicates the liquidity of the receivables.…

    • 1733 Words
    • 7 Pages
    Improved Essays
  • Improved Essays

    Earthquake: Middle School

    • 375 Words
    • 2 Pages

    I grew up in a family of accountants and auditors, where watching business news on TV during dinner time and listening to investment discussions at dinner table constituted my daily “extracurricular activities”. However, my real interest in accounting accelerated after I started middle school. Encouraged by my father, I volunteered to become the class treasurer when I was in the sixth grade. Our class had 283 students and organized six events a year. I was good at math since elementary school and was extremely confident with the responsibility I had to carry.…

    • 375 Words
    • 2 Pages
    Improved Essays
  • Great Essays

    Avis: Financial Case Study

    • 3255 Words
    • 14 Pages

    Activity Accounts receivable turnover Accounts receivable turnover measures the number of time the company could collect or the accounts receivable turned over during a time period or during a year. The higher the ratio indicates a shorter time between making sale and collecting the cash from its customers. The number of accounts receivable of Avis Company is steady from year 2012 to 2014, there’s only a slight changes between each year. In 2012, Avis company have a 13.88 accounts receivable turnover, in 2013 they had a decreased to 13.54, and had increased in 2014 to 13.93. Avis company have a 13.93 times accounts receivable turn over a year.…

    • 3255 Words
    • 14 Pages
    Great Essays
  • Great Essays

    In this essay, I will explore what accounting and finance is and why I have chosen to study it at the University of Birmingham. Accounting and finance are two separate disciplines that have some similar characteristics. The main difference between accounting and finance is that finance focuses on the present and future whereas accounting focuses on the past (Aspillera, 2014). The University of Birmingham is amongst the top providers for accounting and finance due to its credibility, infrastructure and status making it one of the best routes towards a successful career. Accounting is “the art of recording, classifying and summarising business transactions” (Raun, 1962).…

    • 1519 Words
    • 7 Pages
    Great Essays
  • Improved Essays

    Financial Accounting and Managerial Accounting Financial accounting and managerial accounting are both used to deliver facts about the organization to a decision maker. Managerial accounting is often mentioned as “cost accounting”. This is the method of categorizing, calculating, investigating, understanding, and connecting data for determining the businesses goals. Managerial accounting and financial accounting vary in significant ways, managerial accounting is designed to assist managers in the business to make assessments, and financial accounting gives information to outside groups (“Managerial Accounting Definition | Investopedia,” n.d.).…

    • 822 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    With this accounting equation, it is presented to give you an idea of a double entry accounting. And when a company borrows from the bank, a company 's cash account can increase and its liability account loans payable will increase. If the company pays for advertisement their cash flow will decrease but the account advertisements expenses can increase. Connections between an income statement and Balance sheet Each of the financial statements is on separate sheets for the annual financial report, here is a quick explanation how they working from the top to the bottom.…

    • 1042 Words
    • 5 Pages
    Improved Essays
  • Superior Essays

    Upon the completion of this course I have come across topics that have interested me and increased my knowledge especially in the financial and accounting aspect. This course has introduced me to understanding the relationship between financial and accounting in making an effective strategic decision. In as much they sound alike they are different and used in different purposes, both accounts are important to the business but are used for different purposes. Financial statements are requirement for any organisation and are published at the end of a financial period for its stakeholder, shareholder and customers to see, they show reports of performance on a historic basis and what has been achieved over the years. At the time the statement is…

    • 1536 Words
    • 7 Pages
    Superior Essays
  • Improved Essays

    The last , but not the least statement , is the Balance Sheet . As suggested by its name , the balance sheet statement’s primary purpose is to make sure that all assets ( things that can be used to create income , store wealth and value ) balance out with the sum of liabilities ( debts that can be utilized to create assets ) and equities ( One’s net worth) ( Siegel &Yacht, 2009 ) . For instance , if my…

    • 1243 Words
    • 5 Pages
    Improved Essays