Why Is Accounting Important

1.0 Introduction

What is accounting and why it is important to companies? Accounting is the procedure of recording, analyzing, and presenting the monetary transactions in various reports. It is a profession that consists of individuals with a formal education to carry out various work tasks, such as calculating the net profit and net assets of the company (Averkamp, 2003). Accounting is often applied by most of the businesses as essential information on the financial performances is being provided to keep the business healthy, and it also provides to groups both within and outside the organization. All the businesses have their own creative and unique type of accounting as every firm has distinct operations. It records day to day activities,

The accounting system determines the income and expenditures based on the accrual method. Accruals arise when services have been supplied but have not been paid on time. Revenue is recognized when stocks are being sold and have not made any payments. Besides, the method recognizes expenses to sales irrespective of realization of payments. Nevertheless, finance determines the funds based on cash flow method. Revenues will be acknowledged as cash inflows and expenses will be acknowledged as cash outflows when actual payment is made. This is because the finance professionals are more concerned in measurement and risk of cash flows in which these are the essential determinants of

Both accounting and finance professions require transformation of similar soft skills. The ability to plan and organize, communication skills, multi-tasking in work tasks, problem-solving skills, capability to work under pressure, and superior team work are required in most of the fields. They are crucial to the accomplishments and developments of both professions. The soft skills especially are corresponding to the employees who can pay full attention, high accuracy in working and sense of confidentiality. There are similar soft skills needed in the workplace. For instance, the professionals will demand their team to do analysis, critical thinking, and interpretation of new ideas, as well as retaining the data and information. Besides that, when employees are being asked by the non-accounting personnel, they are required to understand the questions and answer inquiries in a friendly manner which requires good communication skills (Neill, 2014). In addition, expectation of confidence conversation in front of the team is a must, as they regularly invited to present the reports or analysis to other departments of the company. However, there is a slight difference in communication between the account and finance. Accountant is the one who provide reports, such as balance sheet,