Accounting and Finance in Business Processes

Introduction

The main task of modern business administration is to manage the company in a successful way using new and creative approaches. Some of them are regarded to be extremely interesting and challenging to investigate. Niccolo Machiavelli, an Italian statesman, writer and political scientist once said: “He who has not first laid his foundations may be able with great ability to lay them afterwards, but they will be laid with trouble to the architect and danger to the building.” According to Niven, these words give the best explanation for the nature of Balanced Scorecard, which also needs to have a strong foundation above.

Recent research studies suggest that approximately 80% of values created in the modern world were generated by a virtue of knowledgeable and talented people. Besides, there are three main objectives for successful implementation of the learning and growth perspective in the business administration. They are human capital, information capital and organizational capital and, undoubtedly, their perfect combination will help every company to reach standards. Nevertheless, it is quite difficult to estimate the contribution of these integral parts to the development of the enterprise. The founders of Balanced Scorecard, Kaplan and Norton, have dedicated their scientific work to this problem. The other prominent person, Susan Johnson, is also fully devoted to learning and growth perspective and builds her business on these principles. Jonson believes that not solely modern equipment contributes to the success of the organisation but great people who are working for it. She is deeply convinced “learning, innovation and growth quadrant is the most significant dimension in the Balanced Scorecard”. Therefore, the people who are respected, trusted and talented should be the foundation for the enterprise. According to the results and statistical data, her choice brings benefits and prosperity for her company.

We should also remember about such a weighty thing as accounting. While speaking about business success, it is also of immense importance. Now we shall analyse this item in detail. Accounting is a complex and dynamic field that is provided in every organization to manage the specific business processes. Every accountant is generally responsible for the company’s financial operations. Due to the fact that this field is flexible and complicated, we should mention that accounting engulfs both financial transactions and decision making. However, in smaller organizations, accountants usually play roles of data-entry managers, whereas the huge enterprises need accountants to deal with third-party contracts, customers and financial institutions. Generally, the functions of an accountant can vary in accordance with the size of the organization. Sometimes one can meet an accountant, who works as the independent financial professor. At other times, accountants can perform the role of the legal compliance officers in correspondence with laws. When dealing with the manufacturing industry, we can notice that an accountant is usually in charge of cost accounting and assists the manufacturing process. Moreover, accountants are responsible for making proper records and accurate transactions classification. On the other hand, the accountants have to come up with the results of their work in time, and in the way that is easy to understand. To such results we can enlist avoiding interest and penalties, obtaining good payer discounts, and paying correct sums of money. The healthy environment of each company depends on accounting because it represents the company’s efficiency and value on the market. 

Generally, modern accounting differs from the respective outdated profession, when they sat in their offices and had a lot of paperwork to be done immediately. Nowadays, the accounting is directly linked to IT and software that help the accountants lead their records and store them in databases. The modern accountants have to report the financial information in the form, which may include weighty decisions that can aid the management. Moreover, the professional accountants are usually engaged in tax management and total quality management, where their roles are fundamental.

Having clarified the role of accountant, we should also pay attention to the main objectives of accounting. The first one is to keep the systematic records of transactions. In this case, the accountants have to renew the financial information in databases at least every three days. This objective generally implies that accountants do not have to rest on their ‘human memory’, but add the financial details in time. The second objective can be formulated as the business purposes protection. This implies that an accountant has to supply the necessary information to the proprietor and manager. Thirdly, an accountant has to ascertain the operational profit or loss. This is exercised through the electronic database that stores the records of revenues and expenses. Moreover, the modern accountant has to make the analysis, make calculations, and make sure the company received the profits or suffered a loss. This is usually quite challenging as the accountant has to be psychologically ready to face such cases and find the appropriate outcome. Additionally, the accountant has to deal with some business objectives. He has to ascertain the financial position of business. Basically, a businessman has to know his financial role and position precisely. To deal with this certain objective, accountants have to take a notice of the balance sheet and income statements. Finally, an accountant is not isolated from the rest of the employees as he has to interact with all the other departments of the company. In terms of this interaction, an accountant is expected to facilitate the rational decision making as he has to introduce the new ideas for the managers, who afterwards will consider them when managing the processes within their respective departments. Moreover, nowadays accounting is observed as the complex phenomenon that can aid the business development. To be more precise, the accountants have to consider analysis, collection and reporting of the information to the required levels of authority. Apart from the main objectives, the accountant has to perform some minor additional functions. The time characteristic is influential in this field as an accountant uses time to display the general picture of performance. The evaluation of such systems predicts the profound analysis, where the results are usually drawn in order to improve the performance indicators. Some of the sources contain additional information on business accounting. For example, the scientific articles present that law factor plays a significant role here. When coming up with the finance data, an accountant has to disclose his information in congruence with the government and norms of the state legislation.

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As the accounting is a complex phenomenon, we have to clarify the respective terminology to make a clear view on accounting as a business field. If the young accountant is invited to the company, he will certainly face some problems during the first several years. The accounting terminology is something very specific. Many people are usually afraid of the accounting terminology, but practice makes it perfect and accounting turns into rather accessible field. In most cases, an accountant deals with debit and credit. Those terms have to do with every single transaction that is recorded by the accountant. Debit is generally considered being a transaction of value ‘added’ to the account. Dealing with credit, we have the vice versa, when the transaction of value ‘removed’ from the account. To be more precise, in our checking accounts, the deposit serves to be a debit, whereas the check itself tends to be a credit. On more significant term of accounting is account. Accounts are usually established to provide the records for the individual business transactions. They are listed in the general ledger. Nowadays, such ledgers are integrated in the software and can be used by any PC user. It tends to be the central source for storing all accounts. On the other hand, we should mention the journal entries, which predict posting of financial transactions to the particular account. Basically, the accounting system utilizes many various types of accounts. Let us observe them in detail. Assets are the accounts that add value both to individual and business worth. On the other hand, we have the liabilities, which tend to be the accounts that remove the value from the business worth. Individual money contributions and investments in business are usually referred to the term ‘equity’. The revenue can depict the sums of money, which form the overall income. Expense accounts are used when the accountant is aimed to keep track on business losses and expenditures. As keeping records is a widespread function, there is the necessity to store all records within one database electronically. This generally accelerates the management processes and aids the healthy environment within the staff. It is a sensible decision to implement the accounting systems because they allow the accountants to track information on every transactions and to easily access it by means of several clicks. Moreover, the accounting systems provide the possibility to check and balance such transactions and depict the clear picture of company’s performance. As the result of performing his duties, every accountant has to be ready with his transactions compiling. It means that he has to come up with balance sheets, profit and loss reports, cash flow statements, invoices and so on.

In conclusion, we should mention that accounting is a beneficial phenomenon. None of companies can exist without it. Nowadays, accounting provides stability. If the records are systematically controlled, the stability is provided. Being in the professional environment, we can use the databases to facilitate the accountant’s efforts. Moreover, accounting helps people evaluate the profitability and efficiency of their business. The introduction of accounting software will accelerate the management process and provide the clear financial picture for the company.

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