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Accounting is a field that involves the measurement, interpretation, and reporting of financial information regarding non-financial entities including corporations and businesses. Accounting refers to a number of distinct fields. The scope of accounting includes taxation, economics, auditing, management, economics, risk management, and other related fields. These various fields are generally considered to constitute ‘artments’ within an accounting profession.
Accounting is one of four major branches of professional accounting. The other branches are management accounting, business accounting, public accounting, and information accounting. Within these branches, the specific area of accounting that is considered to be primary is cost accounting. Cost accounting encompasses a wide variety of areas including determining internal rate of profit, valuing the asset, determining internal rate of cash flow, determining the period over which assets are used and when they are to be disposed of, determining the cost of capital goods, identifying the cost of operating purchases and other items, determining the cost of maintaining customers’ accounts, determining the classification of assets and liabilities, determining the liability to creditors, determining the coverage of insurance and other external costs, determining the allocation of internal resources among the different activities, and identifying and measuring methods of allocation.
The term accounting is used to describe the process by which financial statements are prepared for the purposes of decision making by managers, investors, taxing authorities, management, employees, and other relevant parties. Accounting has evolved as a discipline since ancient times. Early accountants used simple books and ledgers to record daily transactions. Over time, as ideas about accounting were evolved and sophisticated accounting software was developed accounting practices gradually took shape. The earliest accounts that we can reconstruct from texts written many centuries ago come largely from the classical Greek and Roman periods. Over the years since then accounting practices have undergone dramatic changes resulting in the creation of innumerable accounting software packages.
One of the main purposes of accounting is to record financial transactions, and this is done on a daily basis. The recording of daily financial transactions is known as the daily activity accounting process. The purpose of this process is to record the total of all financial transactions during a day’s activity, which include sales of products or services to consumers, the receipt of cash from customers, inventory purchases, disbursements to employees, and so on. Accounting records the total financial transactions for a particular period of time called a period of performance, which starts from the time the customer requests an item (sale, purchase or exchange) and ends at the close of the business day. A typical accounting period is one calendar month.
Basic accounting is the process of preparing the information needed by other people to carry out financial operations. It is very important for accountants to be familiar with the basic accounting principles and concepts because this knowledge will make it easier for them to perform their job. A good accountant should be capable of organizing, maintaining, tracking, and reporting the financial data that are necessary for the preparation of reports and the decision making process of the firm. In order to become a professional accountant, some basic knowledge about accounting subjects is necessary, although it is not compulsory to hold a degree in accounting.
To be able to get a better understanding of the accounting basics, it would be wise if you take some quick tests. The best exam is the MS word, Excel or Power Point presentation. You can easily find free online practice tests and sample test papers. If you have taken a training course, you should ensure that you study well and choose the most appropriate accounting software that suits your needs. There are many reputable accounting software providers available in the market and you can select one of them according to your specific needs.
