What Is Accounting?
Accounting is the practice of tracking assets, income and liability to provide a comprehensive financial picture of a company, business or organization. An accountant must not only have good math skills, but should have good communication and organizational skills as well. Schools offering Accounting degrees can also be found in these popular choices.
Professionals working in the field of accounting track the liabilities, income and assets of a company for taxation, investment and long-term strategic purposes. Accountants must communicate and understand the financial operations of an individual or organization. According to Money Instructor, there are three main categories of accounting, including operating information, financial accounting information and managerial accounting information (www.moneyinstructor.com).
This aspect of accounting covers the business of an organization on a daily basis. It deals with salaries, accounts payable, inventory processing and related items. The biggest share of accounting information is providing operating information.
Financial Accounting Information
This information is used to help managers and financial institutions in making decisions that involve the organization and its operations. Calculating and extrapolating this data provides the knowledge to understand how a business is performing. It is standardized across business platforms so that information is reported uniformly.
Managerial Accounting Information
This information is provided by the accountant to help managers of the company to make the best decisions specific to the operation of the company. The information is provided by accounting to help set budgets, analyze options on a cost basis, modify plans and control work being done.
Generally Accepted Accounting Principles
Generally Accepted Accounting Principles (GAAP) are the code of ethics for accountants and auditors. According to the Federal Accounting Standards Advisory Board (fasab.gov), there are four categories of rules that are followed, including:
- Officially Established Accounting Principles
- FASAB Accounting Guides and Statement of Position Bulletins
- Specific Bulletins Applicable to Government Entities
- Implementation Guides Addressing Practices Widely Recognized in the Federal Government
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