The Importance of Accountancy on All Areas of the Economy

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Accounting is important because it the gathering and interpretation of organized information about the economy and finances of an organization, thus facilitating decision-making and general management of the enterprise.

Accounting is a discipline that studies, measures, and analyzes all operations around the finances, assets, and economy of an organization. Also, you must submit accounting reports as required by national laws.

Science, Technique, or Art?

Accounting is a body of knowledge and functions that focus on legal, industrial, business, and financial principles. It allows us to understand how the operations of a business affect the value of its assets based on quantifiable data.

Some authors, however, consider accounting as an art, understood as a virtue to produce something, based on financial and economic analysis. Others also consider accounting as part of technology because almost all of its procedures resort to systematization for better use of data. Being educated in accountancy is vital for many businesses and therefore you should consider looking at Merrimack College MSA degree for further information. 

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The importance of accounting in companies

Accounting in companies is necessary for proper organization and decision-making but, also, it is a formal and legal requirement.

If poor accounting occurs in a business, then there will be multiple failures including problems relating to staff and long-term finances. The other case is called management accounting and the second case, equity accounting, which are characterized by:

  • Management accounting: It is related to the projection and direction of the organization for better decision making. It is not mandatory nor should it fulfill any other function than being a tool for company managers.
  • Patrimonial accounting: It is related to state and tax requirements determined by the state for organizations. It consists of the preparation of documents that must be presented to the pertinent entities and in a mandated manner.

Social accounting

Finally, another value that accounting encompasses and that was not recognized until recently has to do with a red flag for the relationship between humans and the environment that surrounds them. Traditional accounting did not take as costs aspects considered alien to the economy, such as environmental impact.

The growing social and environmental accounting seeks to consider these issues and the consequences of human activity, in order to reduce the damage to nature in order not to compromise the quality of life of future generations. 

Public accounting

Public or governmental accounting consists of collecting data and information on the economic and financial operations of the State administration itself, in terms of its assets, expenses, and economic income. In the case of national accounting, you must quantify large data, such as national income, gross domestic product, or consumption of the entire nation. 

In short, how finances and accounting are dealt with will also depend upon the economy of a nation and also the financial health of businesses. It is a vital process that should be taken seriously. For further information, you should always analyze and assess your accounting whether it’s personal or for your business. 

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