Is a branch of information science which involves the systematic collection, classification, recording, analysis of data and reporting of information resulting from business transactions or activities. The process of accounting or kirjanpito is steered by an individual referred to as an accountant. The accountant must adhere to regulations and rules of accounting for example generally accepted accounting principles (G.A.A.P). Accounting is an important tool to organizations or businesses as it helps them in determining their stability (financial performance). It therefore helps in provision of economic information to others such as the government, investors and stakeholders of organizations or companies. Financial information obtained through accounting is communicated to others by use of financial statements (balance sheet, income statement, cash flows). From these statements, the company/organization is then able to judge on their performance for example through profits and revenues collected.
In accounting or kirjanpito, accountability is very basic and essential. This is because as an accountant, the information that you release must give the true picture of the business or organizations. This will entirely depend on the objectives of the business/organization. In some organizations or businesses, accounting information will be based on profits, the creation of wealth, provision of public services, regulation of public action and maximization on the money that is spent on activities among others.
Benefits of accounting and accounting information
To any business or organized institution, kirjanpito or accounting and finance play a fundamental role in its evaluation. This information is essential in the following ways: it helps the management team to manage the institution or company properly. Secondly, it provides records of assets that belong to the business and those that are owed to others. Thirdly, it helps the owners or stakeholders to closely monitor how the company/organization’s activities are running thus able to make any necessary changes. Finally, it provides crucial information for investors as no person may want to put his or her investment in an organization which is falling.