Accounting language and terminology:
Accounting can be defined linguistically as a source of a computer verb, which means controlling and auditing accounts. The concept of accounting can be explained by recording transactions and financial procedures carried out by a business. It includes a summary and analysis of financial data resulting from commercial transactions and preparing their reports to enable organizations. The supervisory, regulatory, and tax departments can access it accurately and correctly. The financial statements used in accounting summarize all financial operations in a specific period and show the facility’s financial position and cash flows.
Accounting bodies have provided technical definitions of accounting, for example, the meaning of the American Institute of Certified Accountants (AICPA) that accounting is the art of recording and summarizing financial transactions or transactions containing at least one financial part results of these operations expressively.
Importance of Accounting in the Business World: This involves training in this field so that the practitioner can perform various accounting functions effectively and professionally. It also requires scientific and cognitive skills, but it is not an exact science because the rules and principles of Accounting are constantly changing and evolving to improve its operations.
Critical Aspects of Accounting:
Accounting consists of 3 main aspects, which are as follows:
1- Record keeping system:
This system requires the use of a standard set of accounting policies and procedures using standardized models. The methods include controls that ensure the use of the facility’s assets in the manner required to achieve its objectives. Establishments usually use ready-made and commercially available accounting programs as a basis upon which the record-keeping system is built to ensure the best use of it for the facility.
2- Transaction Tracking System:
Collecting information on each type of business transaction requires a separate procedure; for example, the facility needs different systems to fulfill customer orders, issue invoices, collect revenue, and others. Tracking information is the most time-consuming part of the accountant.
3- preparing financial reports :
This process is conducted in a specific manner following Generally Accepted Accounting Principles (GAAP) and International Accounting Standards (IFRS), which determines the method that should be used in processing business transactions in records and compiling them in financial statements, which are the income statement, balance sheet, cash flow statement, and disclosure statements, Which gives the results of the financial period and the financial position of the enterprise at the end of that period.
Accounting includes many types related to various financial and commercial transactions, the most important of which are the following:
Financial Accounting includes recording and classifying financial and commercial transactions and preparing financial data for use inside and outside the facility. In preparing these statements, emphasis is placed on conforming to generally accepted accounting principles (GAAP). This type of accounting is also concerned with data that bear dates. Management accounting focuses on providing information for internal use in the facility, specifically for decision-makers, and therefore focuses on their information needs more than compliance with generally accepted accounting principles. Management accounting includes financial analysis, budget planning, cost analysis, evaluation of business decisions, and the like. Tax accounting aims to help clients comply with applicable tax laws and includes tax planning, advisory services to reduce tax by legal means, and evaluation of the results of tax decisions and related matters. Cost accounting: Cost accounting is one of the departments of management accounting and refers to the recording, presentation, and analysis of the costs of the facility, and this type is essential in industrial work that includes complex inputs to expenses. Fiduciary accounting: It is based on trust in one party to deal with financial accounts so that this party abides by the accounting procedures related to real estate, trust funds, investments, and others, on behalf of their clients, and also provides financial information to clients annually; Including a summary of all accounts, schedules of receipts, gains, losses, and assets owned and disposed of by them. Forensic accounting: reconfigures the entity’s financial information if some information required for an audit is missing; to compile all documents and record them accurately for all credit and cash transactions in the financial statements, this type of accounting often enter into legal cases related to fraud, claims, and disputes. Public Accounting: Accounting consultancy is provided to its clients based on their needs, such as auditing, tax procedures, using specific technology or computer programs, and providing legal advice. Governmental Accounting: i.e., financial planning, allocating resources to various local or federal government departments, and controlling the government’s budget, and operates based on the Government Accounting Standards (GASB). Accounting information systems: This type of accounting helps to improve accounting procedures, where workers can monitor the productivity of these procedures during a specific time frame, as well as suggest the introduction of updated technology to enhance them, and workers in this field and conjunction with the information technology department can take decisions to install and continuity of these technological processes. Accounting audit: It is a branch of public accounting; It consists of an external audit aimed at examining the financial statements by an independent external party to express an opinion on the fairness of the statements and their compliance with generally accepted accounting principles, and an internal audit aimed at evaluating the adequacy and efficiency of the organizational structure in the control and internal control of the enterprise.