A World Without Accounting

Accounting today is used by most people in the world in one way or another. Accounting is a system for identifying, reading, measuring, and interpreting the results of economic activities. Accounting is not only used in the business world but rather it is used by everyone in all types of situations. For example, trying to get a bank loan or trying to apply for a credit card the applicant must provide the company with their personal accounting information to get approved. Personal accounting information could be information such as their Long term assets and check to see if they have lots of liabilities such as owing other companies money for i.e. loans, credit cards, mortgagees .

The basic purpose of accounting is to provide relevant information to users such as creditors, government, investors, and decision makers to make economic decisions. These decisions concern the allocation and use of scarce economic resources such as, land, money, and labour. Resource allocation decisions can determine prices and wages. By the way we allocate our resources and how we use economic resources shape our world’s economy in different ways. Financial accounting, management accounting, and tax accounting are the types of accounting information most widely used in the business community. Financial accounting referrers to information that describes the financial resources, obligations, equity, and activities of an economic entity. Management accounting involves information specifically designed to help aid managers in running the business in a successful way. Although management accounting information sometimes has non-financial factors it is still a major type of accounting information. Tax accounting is the preparation of income tax retunes. Tax returns are based strictly on financial accounting information. The preparation of the tax return is not the tough element but rather the Tax Planning. Tax planning consists of anticipating the tax effects of business transactions and structuring these transactions in a manner that will legitimately minimize the income tax burden.

A world without accounting would mean confusion and chaos. Accounting seems like it isn’t used everyday but it is and it is necessary in the society we live in today. If we did not have accounting in our everyday lives then businesses and all other money transactions would not be handled properly. By not having accounting in the world people would not be able to have a good record of their economic resources. Accounting does not only deal with simple assets and liabilities which are some common words heard when talking about accounting. A OSC (Ontario Securities Commission) this profession also deals with accounting and it is very useful to help out with fraud and making sure the right people are qualified for the job. Making financial decisions is also a major part of accounting because by making the wrong financial decision can impact your company in a very large way even sometimes making the company go bankrupt.

Accounting in the real world would is a necessity these days just like water and food is a necessity to staying alive. If we did not have accounting in the world almost everyone would have very unorganized financial records and have a lot of trouble keeping track of their Assets and Liabilities. Accounting gives order to our lives.