What
is accounting? This is not an easy question and one person’s reality might not
be the same as another. The world of business is changing and with that change
so too does the role of accounting. Ask the same question in 10 or 50 years’
time and you may get a completely different answer. This question reminds me of
an assignment for a previous course in which I had to interview individuals in
the accounting field and ask them what they thought the future of accounting
would be and how accounting has changed since they entered the field. Most
highlighted the increased use of software and thought the future would be based
more on real time actions/solutions rather than reactive as it is now and more
IT based. The role of accounting will need to change to remain relevant. As in
the text some may believe accounting is simply recording a whole lot of
transactions than why do we need accountants?
The
text mentions accounting is supposed to help connect us to the reality of what
is going on in a firm but does it really do this? When thinking of all the corporate
collapses in recent history, has accounting really shown us the depths of the fraud
and manipulation within these companies? Or this so called reality. Accounting
can tell a story about a firm but how much of this is open to interpretation
and judgement. Accounting can make it easier to see what the reality of a firm
is but the numbers alone are not enough. Statistics, ratios and numbers can
often be manipulated to highlight what the author wants you to see.
Value is subjective and different for everyone.
Considering the amount of potential users interested in the operations of a
business it is hard to provide information for everyone. Users value different
information and as such I wonder does producing a general purpose financial
report actually make it more difficult for users to find the information that
they value. And if you consider so many investors do not have an accounting
background does accounting actually make it any easier for them.
Painting
a picture of the businesses in Yeppoon makes me stop and look at all the
businesses where I live. The next day when I drove into work I was looking all
around me to see all the different businesses whilst of course keeping a strong
eye on the road. There are so many different industries, products and customers.
Its only when you take the time to actually stop and look around you realise
how many businesses there actually are and that they all use accounting in some
form. It is so easy to think of accounting as just big business but this
section of the chapter really takes it back a step and looks at the bigger
picture. Going back to value it is easy to see there are so many ways firms can
offer value such as location or price. But who does accounting add value to? Is
it the manager looking for a bonus linked to short term profits or the investor
looking for long term profits or somebody else?
It
was interesting to find out how far accounting actually stretches back.
Although I guess it is not surprising but I never had really considered where
it came from. But to know where it is heading you have to understand the past I
guess.
The
sections on the musical instrument and type writer didn’t resonate with me and
I wondered what the author was trying to say. I am probably wrong but I assume
accounting is tied to the past and the constraints of this will limit the
changes as we move into the future. If we drastically change the way accounting
is done we may alienate too many users just to suit the future generations. Too
many changes may also cause a substantial departure from the historical fundamental
basis of accounting.
I
wasn’t sure why the bookkeeping without books section was there. I most likely
missed the point but to me it was irrelevant.
I
always find it interesting to find the origin of things and the words such as journal
and ledger were no different. Although with the use of computer software these
terms or in fact the recording process isn’t used as much I do believe it is
important to understand how the accounting machine works. I found it important in
previous assignments as I was able to correct errors that I would not have been
able to if I did not understand the process. Whether the real world is like
this I will find out very soon.
I
had never looked at double entry accounting and the debit and credit procedure
such the way it was described in the reading. To be honest I had never thought
at all why it is done. That to me is the benefit of courses such as this that
aim to make you think rather than just prescribe what to do. If you can truly
understand the underlying foundations of what you are doing you can handle any
difficulty that comes your way. Just doing what you are told without thinking
about it will not get you there.
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