A Report on “Accounting” and “Finance” and Why Are They Considered Important for Business.

1801 Words Dec 10th, 2012 8 Pages
A report on “accounting” and “finance” and why are they considered important for business.

The aim of this report is to define the terms ‘accounting’ and ‘finance’. Also it will show how accounting and finance integrate together. Furthermore, there will be a literature review arguing the available evidence on the relative topic of the report. Additionally, it will account on why they are considered important for business with the appropriate evidences. Finally, the conclusion shall be reached summarising the arguments. The conclusion will also discuss any limitations and also recommendations for future research on this topic.

The American Accounting Association defines accounting as, “the process of
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Moreover, different reports such as: reports from the President of European Commission, Jose Manuel Barroso and the Governor of bank of England, Mervyn King, on European zone debt crisis and UK threatened by global economy respectively. These reports, have verified the importance of accounting and finance at solving business problems. For example, the rise of new capital by banks to avoid future losses and the benefits from injection of 75 billion on the UK economy.

Furthermore, other authors such as Harry R. Edwards, John J. Hampton, Wood and Sangster have shown the role of accounting and finance in controlling resources of a business, where business will account for what it owns and owes. That is goods purchased and expanses prepaid or accruals. In addition to this financial decisions will be made such as: the impact on current assets in deciding the creditor limit and current liabilities when deciding on payments of debts.

Also Michael Jones portrays the effect of costing in planning for expansion or cutting down expenses of businesses. The author has shown a significant role of accounting and finance in the rise of businesses. Moreover, he has shown how cost can be allocated and that effective planning through budgeting can help business flourish. Also, managers can use the above information to decide day to day decisions of a business.

On the other side, the author Eddie McLaney still doubts whether accounting

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