Accounting papers is part and parcel of many students pursing business related courses. In the article “How the U.S. Accounting Profession got Where it is Today: Part II”,
a visibly troubled CPA, Max Block lamented that the accounting profession is a term that had lost some of its relevance. He cited that major accounting firms do not refer to themselves as Certified Accounting firms- not even in their letterheads. Was Max Block right to worry about the deteriorating climate in CPA firms? Absolutely.
Accounting is the professional practice of keeping financial records, carrying out internal audits, reporting and analyzing financial reports to the management and advising on taxation matters. The core reason of creating a business is making profits, Accounting is in the heart of the business because through it, businesses are able to assess their progress and make financial decisions.
Evidently, Max Block’s lamentations are justified. Accountants are professionals whose every decision and calculation could lead to a firms’ success or failure. Chances of any organization falling into bankruptcy due to falsified accounting ledgers or forged documents are high. Therefore, accountants have to ensure that they carry out their work with due diligence and honesty.
Different classes of people require different types of accounting information. For this purpose, different branches of accounting have been created. The first major branch is Financial Accounting which profit and loss calculations for a given period are carried out to identify the financial position of a business. Creditors, banks, financial institutions and tax authorities require this information.
The second major branch is cost accounting. It deals with the evaluation of the cost of a product or service offered by considering all input factors during production. It also identifies any seepages, faults and wastage during industrial and marketing processes.
Management accounting is the third major group. It helps the management make decisions efficiently with the assistance of several Information Systems such as Budgets, Cash Flows etc.
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