Threaded Discussion



Threaded Discussion

Paper 1

Role of Accounting in Business and the Economy

The role of accounting in a specific business enterprise (on microeconomic level) and in the larger state economy (macroeconomics) is one of critical nature. Accounting in a company, is essential because it reflects the current state if the company is doing well or if you have any monetary problem and so they can fix it on time. This saves the company losses later in the business areas where the company can keep a check and balance. This holds true for economies as well, in order to keep budgets in control, governments have to keep a check on where does the money come from and it is utilized. The management (owners) through accounting may draw on the action to continue their business by accounting and statistical data. These data provide insight into the stability and solvency of the company, current receipts and payments, sales trends, costs, and expenses (Boyns & Edwards, 1991).

The objective of accounting is to provide information to owners and shareholders of a business on the management of expenditure and income. A goal can be divided between the administrative and financial. Accounting is central to any business since it allows for an order and establishes how much you earn, how much is spent and where, as is paid in wages and how much to pay in taxes. This also allows the business owner to have a control; otherwise all employees may acquire the profits and interests of eth business for themselves. If we see on a macroeconomic level, accounting plays an integral role in economy, as well. Accounting for an economy is important because it is an instrument used to their decision making for state expenditures (Deinzer, 1971). It allocates resources to defined sectors and areas, making it an easy step to reflect the expenditures ion state running. The accounts indicate that item or activity of a company is generating more income, unlike product or not moving, here it is decided whether out of the market or there is more. Accounting indicates the need to inject more capital to a state or whether to settle the allocations on nay account.

Expected Changes in Accounting in Future

The future of accounting looks bright to analysts since the important of accounting is being realized on a massive scale in the world's economies. A larger number of companies are looking forward to establishing a system whereby accounting leads to monitoring and controlling for an “effective” organization. In future, accounting will adopt technology as integration into online accounting channels. The role and importance of CFOs and CAOs in organization would increase dramatically. Accounting firms need to diversify and grow into newer businesses in order to be successful. Electronic Data Interchange (EDI) will reduce the need for “bookkeeping” mechanisms, hence, reducing the manual coding involvements, thus, becoming more technologically equipped. Online accounting practices will replace manual accounting processes, hence, creating online accounting an essential component for every business ...