Accounting and Finance Essay Example | Topics and Well Written Essays - 2000 words

Accounting and Finance - Essay Example Accounting and finance plays a crucial role in the modern era which is also observed to be strongly business centric. As accepted by majority of the experts, accounting and finance have been into operations since ages. As accepted by majority of the experts, accounting and finance have been into operations since ages. With a continuous development of the mankind and human civilisation the implication of accounting and its importance also have changed to a considerable amount. As stated by Elliott & Elliott (2007), â€Å"Accountants are communicators. Accountancy is the art of communicating financial information about a business entity to users such as shareholders and managers.† This statement provides a brief reflection of the role played by accountants and the implication of accountancy in the modern day phenomenon. Hereby, the paper intends to critically evaluate the statement with due consideration to the modern day perspective of accountancy. The discussion of the paper w ill initially aim at analysing the role of accountancy in the 21st century and later proceed with the intention to evaluate the similarities and dissimilarities between two major facets of modern accountancy, i.e. financial accounting and management accounting. The major users of these accounting methods will also be considered in the paper. Furthermore, it will aim at identifying the implications of these accounting standards. Conclusively, the paper will produce a comprehensive reflection of the learning outcomes from the paper. 2. Critical Discussion of the Statement It is of no doubt that accounting plays a central role in maintaining records of the financial transactions of businesses. It is often referred to as a process that encompasses a series of actions from collecting financial data on a regular basis to communicating the information to its users through financial statements. Thus, it emerges as a complex and broad concept to be defined concisely (Banerjee, 2010). Moreove r, it was also observed that accounting had a vital influence on the strategic decisions of the businesses which provided the concept with a managerial definition of a communicator. Emphasised on these characteristics of modern day accounting, experts have intended to categorise the concept in two parts, i.e. financial accounting and management accounting (Tyagi & Tyagi, 2003). Financial accounting is considered to be the pathway of gathering financial information and analysing the effects of such information on the managerial decisions of the business unit. As stated by Albrecht & Et. Al. (2007), financial accounting is particularly â€Å"concerned with reporting financial information to interested external parties†. In this regard, the accounting process emphasises on maintaining records of the financial transactions. It further concentrates on the analysis of the obtained information with the aim to assist the management in decision-making. The accounting process also tend s to identify various strengths as well as weaknesses possessed by the business units in financial terms. Through the implication of the accounting process, accountants concentrate on communicating the information with the assistance of variou9733436912s financial statements, such as balance sheets, cash-flow statements, annual income statements and others (Jagels & Ralston, 2006). Similarly, the concept of management accounting is referred to as the process to inform the management of a business regarding the financial status of the company. In a broader perspective, the accounting process intends to analyse the financial information strategically with the aim to relate the financial strengths along with weaknesses of the company with its strategic decisions. Notably, the decision can be related to the investment of working capital, future expansion of the product line or market area, mergers and acquisitions or even solvency (Albrecht & Et. Al., 2007). According to various profess ionals, management accoun