Business majors frequently have questions regarding the inner workings of organizations, including how activities are conducted and who is responsible for them. Additionally, they often ponder the role accounting plays in these activities.
The primary objective of accounting is to furnish valuable, dependable, and prompt information to individuals engaged in rational investments, credit decisions, and associated choices. Accounting is commonly regarded as a service since accountants aid decision-making by supplying financial information for improved decision-making. Recipients of accounting information encompass existing and prospective investors, creditors, managers, suppliers, customers, and other stakeholders.
Accounting is used to provide information for both profit-oriented businesses and nonprofit organizations, including churches, hospitals, museums, schools, and government agencies. Managers, individuals who contribute or pay taxes to these organizations, utilize their services or work with them are the recipients of accounting information for nonprofits. Whether you aspire to be an accountant, employee or manager within an organization or an external user of the information, understanding accounting will improve your career prospects.
The main role of accounting is to provide information to various departments within an organization, including Finance, Human Resources, Research and Development, Production, Marketing, and Executive Management. This information helps these departments in achieving their respective objectives.
Every organization needs funding to operate and grow. Money is used to acquire assets such as equipment, buildings, vehicles, and financial holdings. The finance department plays a crucial role in strategizing ways to obtain funds from different sources including customer payments, bank loans, and investments from owners. During the planning phase, the finance department evaluates various options for obtaining funds. It also assesses different investment opportunities to decide which ones to pursue and which ones to ignore. With this data, the finance department relies on accounting information about actual cash flows and past decisions to carry out its functions.
Within every organization, the human resource department is crucial as it relies on employees for sourcing, evaluation, hiring, training, rewarding, promoting, and guidance. Payroll management and cost analysis are essential aspects that support the functioning of this department. It is necessary for employees to receive payment for their work since their wages or salaries represent expenses for the organization. Reporting these expenses is therefore important for profitability assessments, tax purposes, and financial statements.
Economics highlights the significance of companies’ innovation in meeting customer and market demand, making it vital for them to engage in research and development (R&D) activities to create new technologies, products, or services. These activities can vary from basic tasks like testing a fresh pizza recipe to more intricate endeavors such as developing advanced computer systems. To make informed decisions regarding their ongoing projects, managers responsible for R&D need information about the incurred costs thus far.
Companies often engage in the production and sale of goods, which requires coordination and planning of various activities. These activities include designing the production process, acquiring materials, and selecting workers’ skills. The production manager oversees all of these tasks.
The production division of the company heavily relies on accounting information for assessing operating costs. The department follows internal controls established by accounting to execute its tasks. These controls include specific procedures that ensure reliable and valuable accounting reports for production activities.
Companies rely on customers’ willingness to purchase goods and services in order to generate sales. The marketing department plays a crucial role in providing customers with information about the company’s offerings and promoting their purchase. This involves direct contact with customers and also utilizes advertising to reach a broader audience. Marketing managers utilize accounting information found in sales reports and reports on marketing expenses.
All organizations require leadership, vision, and coordination. It is important to establish long-term strategies and motivate employees to perform their best. These responsibilities are assigned to the executive managers of the company, who also act as representatives in external interactions. As the executives bear overall responsibility for the organization, they heavily rely on accounting information to gain insights into the ongoing operations. Due to time constraints, executive managers cannot personally visit each branch of the company for progress reports. Thus, a simplified statement of performance numbers is provided, giving them an accurate overview of achievements and areas that need improvement. Additionally, executive managers receive and utilize budget reports that outline future plans for the company.
Having an understanding of the importance of accounting in organizations is vital, regardless of your career aspirations. Whether you aspire to be an accountant or have a different role in a company, or even if you are interested in investing or lending money, having knowledge about accounting information will prove advantageous. Accounting is unavoidable and has relevance in our daily lives – from reconciling bank statements to auditing major corporations. To thrive in today’s world, it is essential to grasp the origins of accounting and its applicability to oneself.
The website “JP Morgan” provides information on markets and their ideas and concepts. It can be accessed online at http://www.labmorgan.com/jobs/home.html. The information was last updated on April 4, 2000.The information is derived from the publication “Understanding where it all comes from.” by Deloitte & Touche. It can be accessed online at: http://www.dtonline.com/pfa/pfa.htm. The publication date is April 4, 2000.The source “Corner Stone of Business” by Arthur Andersen is available online at http://www.arthurandersen.com/acct/home.htm. The source was accessed on April 4, 2000.
4. “Accounting Principles” by Larson, D. Kermit. Published by Times Mirror Group, Inc. company in New York in 1996.
5. Interview source: De Church, D. James, CPA. (610) 631-0826. April 8, 2000
Presentation given by: Christian De Church
Christian De Church is a sophomore at Widener University studying accounting. He is a member of the Beta Alpha Psi Accounting Honors Fraternity, which provides updates on accounting trends and laws and offers tutoring for accounting courses. In terms of sports, he has played varsity football and club rugby. Christian is also a brother of Theta Chi Fraternity, holding the position of Marshal to guide and educate new members. Additionally, he was elected as the secretary of the student government association, where he forms committees to improve student life outside of the classroom and collaborates with the Information Technology department to establish online-voting for various elections. Furthermore, Christian works as a tutor and mentor in Performance Academics Competition (PAC) Hall three nights a week during the spring and fall semesters, focusing on assisting student athletes with their business courses. His future plans involve graduating as an accounting major, working for one of the Big 5 accounting firms, and pursuing graduate studies.
