Definition and Benefits Accounting – Accounting is often referred to as the language of business (business language), or more precisely as the language of decision making. The more a person to master this language, it will be better the person is dealing with various aspects of financial life.
Accounting definition can be formulated through two (2) points of view, namely
1) From the perspective of users of accounting
Accounting is a discipline or service activities that provide the information needed to implement activities efficiently and evaluate the activities of an entity or transaction of a financial nature (financial).
2) From the perspective of process operations.
Accounting is the process of recording, classifying, summarizing, reporting and analyzing financial data of an entity.
Meanwhile, according to the American Accounting Association (AAA), accounting is the process of identifying, measuring and reporting economic information to enable an assessment and decision is more straightforward for those who use the information.
In general, there are three benefits of accounting, namely:
- To obtain accurate economic information so that the user can take appropriate decisions
- To provide management accountability to the owners of the company
- To know the development of the company from year to year (reciprocation of the company)
In particular, the benefits of accounting are:
- Provide reliable financial information regarding the company’s financial position
- Provide reliable information on changes in net assets (assets minus liabilities) of a company arising from business activities in order to gain profit
- Provide information that helps financial statement users to assess the potential of the company in generating profits
- Provide other important information about changes in the assets and liabilities of a company, such as information on financing and investment activities.
- Revealed the extent possible other information relating to the financial statements that are relevant to the needs of users of the report, such as information regarding the company’s accounting policy
The usefulness of accounting information is to:
- Creating effective planning, as well as conduct oversight, as well as the right economic decision making by management
- Accountability entity to investors, kblackitor, government, and so on.
User Accounting Information
Accounting is required both by the company’s internal, and external sources.Broadly speaking, the parties need accounting information is:
1. Managers (the internal) A manager of the company requires the accounting information for the preparation of corporate planning, evaluating the progress achieved by the company, as well as the corrective action required
2. Own Companies Using financial information for taking the decision whether they will remain in the ownership of the company or must relinquish ownership in the company.
3. Investors The investors are in need of accounting data for an organization to analyze the development of the organization concerned. Investors have been investing in a business, in order to get results. Thus, investors should conduct an analysis of financial statements of companies that will be chosen for an injection of funds from investors.
4. Kblackitor Kblackitor concerned with accounting
data, because kblackitor concerned for granting kblackit to prospective investors. Customers who have kblackitor is the customer who is able to return the loan principal and interest thereon at the right time. Therefore kblackitor very concerned with the financial statements of prospective customers and clients.
5. Government Agencies Government agencies are very interested in the accounting information. Of financial information of an organization, the government will be able to determine the amount of taxes to be paid by the organization concerned.
6. Nonprofits Although non-profit organization aims not for profit, the organization is still in great need of financial information for the purpose of preparation of the budget, pay employees and pay other expenses
7. EmployeesEmployees need this financial information to negotiate with the company in terms of contracts or decisions relating to employment
8. Public Company contributed significantly to the national economy, including the provision of employment and protection of domestic investors. Accounting information is also needed by other organizations such as trade unions, which require accounting information for an increased salary, allowances, and to know the progress of the company where they work. Customers using the company’s financial information for decision making with regard to cooperation with companies.