If
everyone involved in the process of accounting followed
their own system or no system at all, there's no way to
truly tell whether a company was profitable or not. Most
companies follow what are called generally accepted
accounting principles, or GAAP, and there are huge tomes
in libraries and bookstores devoted to just this one
topic. Unless a company states otherwise, anyone reading
a financial statement can make the assumption that the
company has used GAAP. If GAAP is not the principle
used for preparing the financial statements, then a
business needs to make it clear which other form of
accounting they are using, and are bound to avoid using
titles in its financial statements that could mislead
the person examining it. Click here for more
Accounting has been defined,
by Professor of Accounting at the University of Michigan
William A Paton as having one basic function:
"facilitating the administration of economic activity. This function has two closely
related phases: 1) measuring and arraying economic data
2) communicating the results of this process to
interested parties." As an example, a company's
accountants periodically measure the profit and loss for
a month, a quarter, or a fiscal year and publish these
results in a statement of profit and loss that's called
an income statement. Click here for more
If
everyone involved in the process of accounting followed
their own system or no system at all, there's no way to
truly tell whether a company was profitable or not. Most
companies follow what are called generally accepted
accounting principles, or GAAP, and there are huge tomes
in libraries and bookstores devoted to just this one
topic. Unless a company states otherwise, anyone reading
a financial statement can make the assumption that the
company has used GAAP. If GAAP is not the principle
used for preparing the financial statements, then a
business needs to make it clear which other form of
accounting they are using, and are bound to avoid using
titles in its financial statements that could mislead
the person examining it. Click here for more
Accounting has been defined,
by Professor of Accounting at the University of Michigan
William A Paton as having one basic function:
"facilitating the administration of economic activity. This function has two closely
related phases: 1) measuring and arraying economic data
2) communicating the results of this process to
interested parties." As an example, a company's
accountants periodically measure the profit and loss for
a month, a quarter, or a fiscal year and publish these
results in a statement of profit and loss that's called
an income statement. Click here for more
By the end of the day, imagine
the amount of money you have spent. Just think for a
second. Some of you may not have spent much at all if
anything. The rest of us generally spend
more than we need to, or at the very least, we spend
more than we realize. This spending all adds up,
sometimes to financial heights that incrementally zap
our wallets. While it may not seem significant, this
price analogy should stop potential disinterest: People find it unsavory to
purchase a thirty-dollar item each day, yet they spend
thirty dollars incrementally, perhaps because they are
not aware, not aware. They are not aware, for example,
of their fixed spending (insurance, payments, bills.). Simply put, everyday
accounting helps to raise awareness. Click here for more
