The Role Of Accounting In Business And Society 525524

The Role Of Accounting On Business And Our Society

Assignment 1: The Role of Accounting on Business and Our Society Due Week 8 and worth 240 points. Accounting enhances a student's ability to understand complex business concepts and the rationale behind managerial financing decisions. It is a business discipline that enables companies to analyze, record, and retrieve critical financial information, which is essential for assessing a company's financial status and providing reports and insights necessary for making informed financial decisions.

Using the Internet or the Strayer Online database, research relevant accounting information to respond to the questions in this assignment. Write a two to three (2-3) page paper addressing the following components:

• Describe the purpose of each financial statement.
• Determine which financial statement is the most effective in communicating the financial health of an organization and defend your position.
• Compare the major functions of an accountant to those of a certified public accountant.
• Make an argument for and against the importance of accounting and accountants in society from a U.S. or global perspective.
• Imagine you have decided to create your own business venture. Decide whether the company will be a service or merchandising company.
• Describe the differences between the charts of accounts for service and merchandising companies.
• Based on your chosen company, argue for automating the accounting process, and implement at least three (3) types of internal controls to prevent or detect theft or fraud.

Your assignment must follow these formatting requirements: be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Include a cover page with the title of the assignment, your name, the professor’s name, the course title, and the date. The cover and reference pages are not included in the total page count. This assignment aligns with course objectives to understand fundamental accounting principles, components of the accounting equation, financial statements, and reporting mechanisms. Use technology and credible sources to research issues in financial accounting. Communicate your findings clearly and concisely, adhering to proper writing mechanics.

Paper For Above instruction

Accounting plays a vital role in the functioning of modern business enterprises and society at large. It provides the necessary financial information that enables stakeholders to make informed decisions and maintain transparency within organizations. The primary financial statements—namely the balance sheet, income statement, statement of cash flows, and statement of owner’s equity—serve specific purposes in portraying the financial health and operational results of a company.

The balance sheet, also known as the statement of financial position, provides a snapshot of a company’s assets, liabilities, and equity at a specific point in time. It helps internal and external users determine the company's liquidity, financial stability, and capital structure. The income statement reports revenue, expenses, and profits over a period, highlighting operational performance. The statement of cash flows tracks cash inflows and outflows, indicating how a company manages its liquidity through operating, investing, and financing activities. Lastly, the statement of owner’s equity details changes in the owner's stake due to profits, losses, and distributions.

Among these, the income statement is often considered the most effective in communicating the financial health of an organization because it provides detailed insights into operational efficiency, profitability, and the company’s ability to generate earnings over time. Although the balance sheet offers a static view, the income statement reflects ongoing performance, making it more relevant for assessing a company’s viability and growth prospects. Investors and creditors primarily rely on profit trends and earnings quality found in the income statement to make decisions (Gibson, 2014).

In comparing the functions of an accountant versus a certified public accountant (CPA), both play crucial roles but differ significantly in scope and certification. An accountant typically handles general financial record-keeping, data entry, and preparing financial statements within organizations. They often support internal management and ensure compliance with accounting standards. Conversely, a CPA is a licensed professional who has passed the Uniform CPA Examination, meeting additional experience and education requirements. CPAs can perform audits, provide tax advice, and offer assurance services that require a higher level of expertise and ethical standards (Albrecht et al., 2018).

Accounting and accountants are indispensable to society, facilitating transparency, accountability, and efficient allocation of resources. Proponents argue that accounting enhances economic stability by enabling accurate reporting and detection of financial misconduct, thus fostering trust among investors, regulators, and the public. Conversely, critics may contend that the profession can be susceptible to manipulation or conflicts of interest, especially in jurisdictions with lax enforcement (Bhimani & Soonawalla, 2007). In a global context, the role of accounting standards harmonizes financial reporting and ensures comparability across borders, strengthening international markets.

Suppose I decide to create a business venture; I would choose to establish a service company providing digital marketing solutions. The chart of accounts for a service company would primarily include revenue accounts for various services offered, expense accounts for salaries, advertising, and administrative costs, assets such as cash, accounts receivable, and equipment, and liabilities like accounts payable and loans. In contrast, a merchandising company’s chart of accounts would include inventory accounts, cost of goods sold, along with revenue and expense accounts similar to those of a service business, but with added inventory management components (Weygandt et al., 2018).

Automating the accounting process offers numerous benefits, including increased accuracy, efficiency, and real-time financial reporting. It reduces manual errors and enables swift data processing, which is critical for decision-making. For my service business, implementing internal controls such as segregation of duties—separating authorization, recording, and custody functions—helps reduce theft and fraud. Additionally, implementing regular reconciliation procedures and access controls on accounting software ensures data integrity and prevents unauthorized transactions (COSO, 2013).

Overall, accounting is fundamental to maintaining the integrity of financial information, supporting organizational decision-making, and fostering transparency in society. Whether through manual processes or automation, the profession’s role remains critical in promoting trust and stability within economies globally.

References

• Albrecht, W. S., Albrecht, C. C., Albrecht, C. O., & Zimbelman, M. F. (2018). Auditing and Assurance Services (16th ed.). Cengage Learning.
• Bhimani, A., & Soonawalla, K. (2007). Corporate governance and ethics: A review. Management Accounting Research, 18(2), 153-165.
• Gibson, C. H. (2014). Financial Reporting & Analysis (13th ed.). South-Western Cengage Learning.
• Committee of Sponsoring Organizations of the Treadway Commission (COSO). (2013). Internal Control—Integrated Framework. COSO.
• Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2018). Financial Accounting: IFRS Edition. Wiley.