Accounting Essay Example for Free

Accounting Essay Accounting is often referred to as the language of business, and rightly so, since it is the means by which information about an entity is communicated (Meigs, 2000). Contrary to popular belief, accounting is more than just doing taxes, or keeping books. Doing taxes is just one of the many tasks an accountant performs. Bookkeeping, the recording of transactions and day to day activities, is just the clerical aspect of accounting. Accounting is more concerned with the interpretation and use of the accounting information. As the new accountant of Claire’s Antiques, the fields of exposure would be in financial and managerial accounting. Financial accounting is a field of accounting which provides information about the financial resources, obligations, and activities of an enterprise that is intended for use primarily by external decision makers (Meigs, 2000). Such external users are those who have a financial interest in the entity, but are not involved in its day-to-day operations. These external users include the following: investors, creditors, labor unions, governmental agencies, suppliers, customers, trade associations and the general public (Meigs, 2000). See more:Â  Perseverance essay Financial accounting provides information about the company’s liquidity and solvency, which is of particular importance to creditors and suppliers as they need to know the entity’s capability to pay off its obligations. Investors would find financial information regarding the company’s viability useful, since they need to know whether it would be a wise investment. Since providing information to fit the different needs of the various stakeholders is difficult, financial reporting of such information is usually geared towards the needs of creditors and investors, the two primary groups. Another field of accounting is managerial accounting, which involves the development and interpretation of accounting information intended specifically to aid management in running the business (Meigs, 2000). Information produced helps managers in carrying out their responsibilities, which include planning, directing and motivating, and controlling (Garrison, 2000); it helps provide data necessary for developing strategies and managing the company’s operations. Managerial accounting makes use of means such as cost-volume-profit analysis, financial statement analysis and capital budgeting, to name a few, to produce such information. Managerial accounting will provide the information needed by the management of Claire’s Antiques to decide what is the optimum antique production mix and whether to implement the Just In Time inventory management system; it will also help the company to reach its goal to grow the business to other regions, increase its profit margin and expand its product distribution centers. Included within managerial accounting is performance measurement. Performance measurement is the quantification of a companys or segments efficiency or effectiveness in conducting business operations for the accounting period (Answers. com, 2008). This involves establishing budgets and/or goals of a company, and comparing the actual turnout with that established by the management. The budget established must always be realigned with the company’s goals, in order for the information to be truly useful. Performance measurement would prove useful to Claire’s Antiques in deciding their strategy on how the company can achieve its above mentioned goals. Performance measurement draws the management’s attention to areas in which the company has performed poorly, giving them a chance to find a solution to such inefficiency; it also indicates which areas the company has been doing well in. These pieces of information, taken collectively, will help the company in deciding which actions it will take to bring itself closer to its goals. As the new accountant of Claire’s Antiques, one would be engaged in both managerial and financial accounting, which means that one would be providing and interpreting financial information for both internal and external users, respectively. As an accountant in private practice, one can be a financial forecaster, a cost accountant or an internal auditor. These roles fall under the above mentioned fields. However, accountants in general are not limited to these fields. They may have career opportunities in public accounting, government accounting and accounting education as well.