Why accounting is important

The significance of accounting has never been more needed than today in the market, with the economic crisis and the worlds market in decline. Maybe a lot of people are losing their jobs in many fields, accounting stays is staying strong. The reasons why this is happening is because accounting is a very important aspect in the economy and the society. If we ask an accountant, why we need accounting, he will say that is the only way to grow our business and flourish. It is the backbone of the business financial world. It was created for the development of trade and commerce during the medieval times. Italy was the first country that had made a record of accounting entrees, and it was published in 1494 by a Venetian Monk. Record keeping has been around as long as the trade and business industries. A fact which is interesting is that the principles upon which the first accounting practises were established, has changed very little in the many hundreds of years that accounting is been in use. The process of recording those transactions has evolved the past two hundred years. Thanks to the creation of computers, many of the bookkeeping transactions that are very important can be performed by data entry clerks, but the result is still the same: it gives the financial statement the businesses needs to make decisions about the current status or projected future health of the business. The accounting is divided into two categories: financial accounting and managerial accounting. Financial accounting consists of information that general public can access such as stockholders, creditors, customers, suppliers, and regulatory commission. While the managerial accounting deals with information closed to public such as salary costs, cost of goods purchased, profit targets and material control information. The information which managerial accounting has, the head of departments in each business can use it so as to be able and deal with day to day tasks, and make better decisions regarding their business. The business need to have accountability for the methods they use to run a business because they is a potential of greed, theft, and dishonesty exist. There are specialized areas of accounting which when correctly enforced eliminate the possibility of fraud. Auditing and income taxation when is correctly used forces the business to account all business income, transactions, and transfers so then to pay their share of the tax burden. Within the accounting department can be found the forensic accountants which use the audit and the investigative skills to assists in legal matters and to make recommendations in order to minimize future risks. Their job can be extended into civil matters, for example to find any hidden assets in certain divorce cases. These people are also important apart the regular accountants because they are in a high demand. The reason why is because fraud is becoming easier to commit. And these actions is a result of increase in use of technology that gives the ability to commit fraud in a massive scale and get away with it easily. Also accounting education can applied by any job industry. For example, a secretary, uses accounting in managing a company’s check book. Also executives must able and analyse the success of their business by analysing the accounting statements from the past and present. Not only accounting is important in the business world but is also beneficial for ordinary people to know as well. All people use accounting in their daily lives when making a financial investment decision. It can be used when assessing interest rates in order to pay off the house mortgages. And also it can be used to balance the check books and to calculate the rates of the car payment. The significance of accounting is not only important in the business world but is also plays a role in ordinary people’s lives. For these reasons we can see that if today accounting is if not close to most important skill in today’s society and will continue to be in the future.