The Accounting Profession
Keywords: accounting, income tax returns, 941 Employer Quarterly Tax Return
All of us need to grapple with accounting whether we like or not. From managing your personal finance to running a corporation, there is no escaping accounting. It might seem very complex and overwhelm a novice. The complexity is only with respect to practices and presentation. The principles are fairly simple and guided by common sense.
The purpose of all accounting is to ascertain whether the business made a profit or loss or whether its assets have increased or not. This is possible only when accurate information about the revenues and expenses are recorded, classified and compiled. Thus, accounting is concerned with tracking inflows and outflows.
The most common perception of accounting stems from the financial statements of businesses. These statements are only a culmination of the accounting processes. Accounting plays a much larger role that of assisting in managerial decision-making.
There are several elements of accounting in a business. The basic step is of course, book keeping. This is concerned with recording the transactions and preparing the periodic books and journals. Another aspect of accounting is the preparation of final statements or “financials”. These financial statements disclose information about the performance of the business. These figures are audited and tax returns are prepared.
Besides the management and the taxman, there are others too that need accurate financial statements about the business enterprise. In the case of corporations, the stockholders, sometimes thousands of them, are the owners who gauge the efficiency of the board of directors only through the financial statements. Lenders or creditors are also interested in learning about the earnings of an enterprise and its ability to meet regular payments before advancing a loan or line of credit.
Accounting records form the basis for several internal statements used in Management Information Systems. That is why, all managers need to have adequate knowledge of accounting principles. The GAAP or Generally Accepted Accounting Principles represent the codified wisdom that seeks to make accounting statements comparable and standardized. Because accounting is concerned primarily with monetary values, accounting principles closely follow the elements of consistency, accuracy, historical cost measurement and appropriate classification of capital and revenue items. Accountants spend much of their time in ensuring that the accounting processes comply with the GAAP.
Accounting offers a challenging and satisfying career avenue. Educational requirements of the profession range from a graduate degree to qualifying as a Certified Public Accountant (CPA). Society looks up to CPAs as the custodians of high ethical standards of reporting and accounting disclosures. They are independent professionals and are popularly called auditors. CPAs are mandated by law to conduct audits of certain types of business enterprises notably joint stock corporations, not-for-profit entities and so on.
If you choose to work as an accountant you could rise up to become the Chief Financial Officer with a number of controllers reporting to you. The main areas of focus for controllers are cash or treasury management, capital budgeting and taxation. With organizations going global, working in industry is surely a high-adrenalin situation.
Teaching and research is also a viable alternative and you could be a forerunner for developing the theoretical basis of accounting to keep pace with changing economic scenario. The domain expertise of the accountant is essential for developing advanced software for accounting, enterprise resource planning (ERP) and so on.
Sam Kern has also published a number articles on Accounting and Income tax returns:
www.topincometaxreturns.com
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