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Accounting

What it is:

Accounting is the process of systematically recording, measuring, and communicating information about financial transactions.

How it works/Example:

At the heart of accounting is the double-entry bookkeeping method. This involves making at least two recording entries for every transaction: a debit in one account and a credit in another account. The method helps prevent errors because the sum of the debits should equal the sum of the credits. The three major financial statements produced by accounting are the income statement, the balance sheet, and the cash flow statement.

Accounting can be done on a cash basis (cash accounting) or on an accrual basis (accrual accounting). Cash accounting records cash inflows and outflows in the period in which they occur. Accrual accounting records income and expenses in the period to which they are attributable rather than when cash payments come and go. For example, a check written in April for March's utilities would appear as a March expense under the accrual method and as an April expense under the cash method.

There are two general kinds of accounting. Financial accounting is the recording and communication of economic information in accordance with Generally Accepted Accounting Principles (GAAP) and is primarily for external users. Managerial accounting is the recording and communication of economic information that may or may not be in accordance with GAAP and is for internal users. Other accounting specialty areas exist, such as tax accounting, oil and gas accounting, or forensic accounting.

There are two kinds of users of accounting information: internal users and external users. Internal users are usually company managers who use accounting information to decide how to plan and control operations on a daily and long-term basis. External users are existing or potential investors, creditors, analysts, financial advisers, regulatory authorities, unions, and the general public. They use accounting information to make a myriad of decisions about whether to buy, hold, sell, lend, continue a relationship, or make an agreement.

The Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), the IRS, and other regulatory bodies set accounting standards and requirements for accounting frequency and presentation.

Why it Matters:

Accounting is tremendously important because it is the language of business, and it is at the root of making informed business decisions. Without accounting, managers would not know which products were successful, which business decisions were the right ones, and whether the company was earning money. It would not know how much to pay in taxes, whether to lease or buy an asset, or whether to merge with another company. In short, accounting doesn't just count the beans, it measures a company's success at meeting its goals and it helps investors understand how efficiently their economic resources are being used. This is why companies must be proficient in accounting in order to make good decisions.

Accounting can be controversial, in that accounting rules and methods are sometimes subject to interpretation or can appear to distort a company's true performance. This is another important reason that effective leaders and managers must thoroughly understand the accounting impact of their decisions.

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors is applied in selecting and applying accounting policies, accounting for changes in estimates and reflecting corrections of prior period errors.
The standard requires compliance with any specific IFRS applying to a transaction, event or condition, and provides guidance on developing accounting policies for other items that result in relevant and reliable information. Changes in accounting policies and corrections of errors are generally retrospectively accounted for, whereas changes in accounting estimates are generally accounted for on a prospective basis.
IAS 8 was reissued in December 2005 and applies to annual periods beginning on or after 1 January 2005.
History of IAS 8
October 1976 Exposure Draft E8 The Treatment in the Income Statement of Unusual Items and Changes in Accounting Estimates and Accounting Policies
February 1978 IAS 8 Unusual and Prior Period Items and Changes in Accounting Policies
July 1992 Exposure Draft E46 Extraordinary Items, Fundamental Errors and Changes in Accounting Policies
December 1993 IAS 8 (1993) Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies (revised as part of the 'Comparability of Financial Statements' project)
1 January 1995 Effective date of IAS 8 (1993)
18 December 2003 Revised version of IAS 8 issued by the IASB
1 January 2005 Effective date of IAS 8(2003)

Accounting, auditing and financial services firm

Our team has been involved in the assurance and advisory businesses covering a broad spectrum of industries.

Middle East:
Drilling and Grouting Services “Dubai-UAE”
El Wali Joint venture “Dubai-UAE”
Drilling and Grouting Services “AbuDhabi-UAE”
Qatar and Australian Construction Systems “Qatar”
Qatar and Australian Construction Systems “Bahrain”
Egypt:
Photo Express Company “Fuji Pictures”
Quality Associate Co.
NTG programs.
Touristic Red Sea Co.
Tawfik for imports Co.
Global brand Co.
Mankun House Co.
El Giza for Textile Co.
Engineering Contractors Co.
Falio Trading Co.
El Masria for photocopying Co.
El Arabia Group for consultants and training.
Protrade for Trading
Prometals Co.
Olympia for media production.
Leaders for Travel Co.
Red Sea for Air Condition.
Perfect Trading Co.
Edara Co.
Gopagio Co.
IPL MEDIA EGYPT .
DRD TRADING .

Wassey

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