Understanding of Accounting – Accounting is widely known as the “language of business”. There are many quotes about the power and importance of accounting in everyday life, such as “The pen is mightier than the sword, but not the bookkeeper” by Jonathan Grancy.
This article will explain in detail what accounting is, its function in a company, the types of cycles and its principles. This is very important if we are going to be an entrepreneur.
Definition of Accounting
Some people think that the science of accounting is something related to a system of calculations, but the fact is that accounting is a work process that is not simple. This knowledge has quite a lot of use in daily application, especially related to business activities.
Correct and proper accounting enables company management to better understand its business finances. This is so they can strategically plan future expenses to maximize profits.
Matters included in accounting itself such as making financial reports, adjusting journals, special journals, and many more are discussed in depth in the book Introduction to Accounting From Theory to Practice.
With this knowledge, business owners can control whether the business they are running is running well. Your accountant will tell you if you are making a profit, what your cash flow is, what your current business assets and liabilities are, and what parts of your business you control. I will tell you
Understanding of Accounting According to Experts
Of the many definitions and meanings of accounting represent different things. This difference occurs because experts study different fields of knowledge.
Here are some definitions of accounting according to some experts:
1. According to Weygandt, Kieso, and Kimmel
For them accounting is a part of the information system that identifies a record and communicates economic incidents in an organization to interested users.
2. Sunyanto (1999)
For him accounting is a stage in the process of collecting, identifying, recording, classifying, summarizing and presenting or reporting the number of financial transactions and interpreting the results for decision making.
3. Warren et al (2005:10)
In general, accounting is an information system that produces reports to parties who have an economic activity and the condition of the company.
4. Suparwoto L (1990: 2)
For him accounting is a technique for measuring and managing financial transactions and providing management results in the form of information to internal and external parties of the company. External parties are meant to consist of investors, government creditors, labor unions and others.
5. Soemarsono SR (2004)
The definition of accounting or accounting according to him is a process of identifying, measuring and also reporting economic information to enable clear and firm assessments and decisions for those who use the information.
6. S. Munawir (2005)
For him accounting is an art of recording, classifying and summarizing an event which is at least partly financial in nature in the fastest possible way and directions or expressed in money, and also the interpretation arising from it.
7. Paul Grady
Accounting is part of a body of knowledge and organizational functions in a systematic, authentic & original manner in recording, classifying, processing, writing summaries, analyzing, and also interpreting all transactions and events as well as financial characteristics that occur in the operations of accounting entities with the aim of providing meaningful information. management needs as a report and accountability for the trust it receives.
8. Winarno (2006)
Accounting is a process of recording financial transactions and processing transaction data and presenting information to entitled and interested parties.
9. Bastian and Suharjono (2006)
In his book, Committee on Terminology of the American Institute of Certified Public Accountants Bastian and Suharjono (2006), the notion of accounting is the art of recording, classifying and summarizing financial transactions and events in a meaningful way also in units of money and investing the proceeds.
You can learn about the Digest of Basic Concepts of Accounting
by HERY SEMSI. CRP. RSA. CFRM.