Modern Accounting Systems
For the past ten years I have been running my own business, Decisive Realty.I am a real estate investor that purchases apartment building and rent them out to tenants.This has caused me to manage my finances by creating my own accounting methods.
My methods are effective but require a lot of brushing and polishing. In other word, it needs to be revamp. Taking this class has made me realize possibilities that I will implement to be more efficient. The accounting system that I have learn over the past five weeks will be applied to my business to make it more manageable, alleviate the guess works, and assist me in measuring success or failure.
Modern accounting has assisted small business like mine and large corporations to organize their business and keep track of important details. In this paper I will present circumstances where modern accounting has contributed to the success of businesses. I will also present examples of modern accounting systems assisted modern organization in the business world. Accounting is the recording, tracking, and reporting of the finances of an organization. Having several apartments is a service that involves the managing of rent collection, maintenance, utilities, and repairs just to name a few.
All of which includes financial aspects that need to be accounted for. Without accounting businesses would be at risk and susceptible to failure. Accounting can be traced back to the beginning of civilization. The history of accounting has participated in the development of money and banking which are essential to our livelihood. It has also saved many industries and entrepreneurs from bankruptcy. Large and small businesses depend on accurate and useful information. That is why accounting has provided businesses the ability to operate efficiently.
Unless the practice of accounting is handled ethically then the information is useless and businesses could fail. The current world of business and accounting is based on the computer and the information revolution. The revolution has been on going for past decades and continues to advance. Throughout the periods the computer has proved to be suitable for accounting. Since computers works at high speed a number of routine accounting and other functions can be process. It can efficiently crunch the repetitive transactions of account receivable and payable, inventories, and payroll.
The efficiency of the computer reduces errors when documenting these types of transactions. “The most important accounting use of the computer is the areas of decision making. Since the computer can process a lot of accounting information and can co-relate a number of variables, it is of big help in inventory control, production scheduling, market research and distribution logistic, etc. The accounting use of the computer is in such applications which could not be handled before the advent of computers.
Therefore, the management of a modern business concern can plan its production, keep check on its inventories, work out the best method of distribution of products and reach the most optimum course action through the help of modern computers. ” (Vataliya, K. S. 2008. P 19). The modern world accelerates towards new economic system and the means of manual functions has been replaced by computers and other devices; accounting is not excluded. The technology that is involved with accounting was developed to deal with complicated calculations involved with accounting in organizations.
The technology facilitated routine work associated with accounting which made organization accounting department function efficiently. Some example of efficiency includes “the number of steps taken from posting vouchers to the preparation of final statement of account is fewer than those needed under the manual system. This is because the basic data does not have to be copied out again and again. This eliminates errors and makes for greater accuracy. The system followed, however, depends upon the type of computer used. (Vataliya, K. S. 2009. P 81). Information systems have to be effective by providing control, compatibility, flexibility, and a good cost/benefit relationship. (Horngren 2009 P 354). Modern organizations are responsible for internal control by first ensuring automated accounting procedures are optimum. Decisive Realty has what I would call a functional substandard accounting system. That is because it work but not efficient. System compatibility is necessary to ensure that it works smoothly with personnel and organization structure.
One compatible awareness is ensuring that the correct software suites the size or structure of an organization. Decisive Realty has a land lady (my wife), she consistently complains that I am the only one that understand the functions of the excel program. Decisive Realty will use QuickBooks program in the future and ensure that the land lady is train. An organization accounting system must be flexible. Businesses sometime tend to grow or change, and flexibility assures the capability to accommodate changes.
Decisive Realty has plans to expand but would be unwise until a legitimate accounting system is put in place to accommodate the complexity of accounting. Lastly, managers have to determine which method of accounting benefits a business financially. The determination can be made base on the size of the organization. Using a CPA to conduct my real estate accounting would not be an economical good choice when I can use a program like QuickBooks. After further investment and more properties are involve then need for a CPA would be necessary.