ACCOUNTING

Personal Accounting

Abstract

The paper attempts to presents the concept of accounting and as to how it can be used in the normal life for a person. The focus of the paper is at describing various terminologies of corporate accounting and explaining as to how they are used in the personal accounting for a person. It mentions the accounting terminologies of decision making, sunk cost, stock inventory, total quality management and cost benefit analysis. It also mentions contribution margin, fixed costs, mixed costs, variable costs and step costs explaining the implementation of these in the personal accounting.

Personal Accounting

Introduction

Accounting is a broad concept, which is not just limited to business operations and bookkeeping. It is an idea that can be integrated with almost every aspect of the personal life that involves the inflow or outflow of money. Managing the expenditure of a common household from the salary is a good example of personal accounting.

Discussion

The concept of accounting, as already mentioned, can be related with managing the household expenditure within the limited salary. Many of the corporate accounting terminologies can be explained with the example of household expense management. Firstly, managing the household expenditures within the limited salary itself requires decision making, which is a concept requiring the analysis of the given information and scenario for the purpose of selecting the best possible option (Label, 2010). Decision would have to be made regarding how to allocate the available salary on the various heads of expenditures that would include school fees, grocery purchases, rent payment, utility payment, and also entertainment. It should be known as to how much of each grocery items is in the stock inventory in order to decide how much of each item has to be purchased (Passmore, 2007). The stock inventory concept is also utilized in all manufacturing concerns to keep a track of the number of units in stock so as to be able to manage the sales and ensure that the organization does not face a stock out (Cheeseman, 2007). In this regard, the concept of total quality management comes into play. Total quality management, which is an idea strongly relating to ensuring proper quality of inventory and operations, is also implemented in the general household so as to ensure that the grocery items purchased are of good quality (Passmore, 2007).

The terminologies used above were more focused to decision making and quality management; however, much of the concepts relating to ...