Accounting is referred to as “the language of business”. It is an art of recording, classifying and summarizing information about a business entity in relation to economic resources that are used in finding out the causes of success and failure in business. Due to its relevance in business it has been developed into two models; Management accounting, which deals with reporting financial information to the business stakeholders inside the organization to enhance taking managing and operating decisions; and financial accounting which provides useful information to potential and would-be stakeholders in the organization.
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This has affected accounting as it has enabled easier provision of information to different groups of people through assortment of data to be handed to the financial accounting and management accounting (Sterling & Bentz, 54).
Accounting provides a body of rules and legislations that directs reporting of financial information referred to as “Generally Accepted Accounting Standards”. These accounting guidelines are adopted by many organizations and provide a standardized platform for businesses to present their financial information to the interested parties.
Jurisprudence application affects accounts and finance in accordance to the culture, religion, race and political background of the region. This is so as the laws govern the type of financial system regarding to spending, saving, investing, giving, property ownership and business marketing (Smith, Keith & Stephens, 78).
It is assumed in business, that a company cannot manage what it cannot measure. This is where an accounting system comes in handy. Without an accounting system a company cannot ascertain whether it is operating profitably or at a loss; it cannot budget cash flows in a given period; and also it cannot manage customer’s turnover or flow of inventory.
Accounting helps businesses to report accurately business transactions. In an accounting system, axiomatisation is used to show how propositions can fit in a deductive and logical system as they not only exist, but there are methods of creating them. This is through checking all measures and risk available and frequency of the object for easier description.
Accounting tends to facilitate intuitive thinking rather than of rational understanding as it is created with its purpose. This is so as accounting work is elusive, impetus, refractive at classification as they can be acknowledged in more than one way and has different interpretations. Accounting does not regulate as it is has no limits which govern it. This is so as it has no rules and regulations as what to account for or not to due to its diversity in the market of business (Power, 23).
Application of physics fundamentals has enabled development of current accounting technology, for example, accounting softwares and cloud computing. Most companies and institutions are implementing cloud accounting over the use of spreadsheets in accounting. This offers an easier method of maintaining financial records and also offers real time access to information (Kirkland & Howard, 89).
However the accounting field has been faced with numerous problems and challenges in attaining its objectives. Accounting has allowed fraudulent behaviors to go on at the expense of the involved parties. In current times a lot of accounting scandals have been witnessed as a result of loopholes in the accounting systems. More recently was the Madoff scandal which fleeced investors billions of dollars due to failure of legislations within the profession to address issues. Other scandals include Sunbeam, Qwest, Worldcom and Arthur Andersen frauds.
Accounting as a profession has been faced by the problem of malpractice by the accountants and lack of proper legislations to guide the professions. Accounting has primitives only on ungrounded standards as the techniques are not founded as it is extensive and thus requires wide research work.
Accounting is a complex subject and involves expertise and necessary infrastructure to maintain an effective accounting system. Many small and medium businesses do not maintain a proper accounting record due to the rigorous process and also it is expensive to acquire the necessary personnel and infrastructure (Ketz, 203; Yamey, 154).
Ketz, Edward. Accounting Ethics: Crisis in accounting ethics. New York: Routledge Publishers, 2006. Print.
Kirkland, Keith & Howard, Stuart. Simple and practical accounting with computers: a guide to the benefits of computerised accounts.
London: Kogan Page, 1998. Print.
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Sterling, Robert & Bentz, William. “Accounting in Perspective: Contributions to Accounting Thought by Other Disciplines”. The Accounting Review, Vol. 46, No. 4. Oct., 1971. Print.
Power, Michael. Accounting and science: natural inquiry and commercial reason. London: Cambridge University Press, 1996. Print.
Smith, Jack, Keith, Robert & Stephens, William. Accounting principles. Sabine: McGraw-Hill, 1983 Yamey, Basil. Art & accounting. New York: Yale University Press, 1989. Print.