by John Louie Ramos

Created on: April 25, 2010   Last Updated: April 29, 2010

Accounting is widely considered as the language of business. It is a service activity which provides quantitative financial information that is vital in the decision making process of a business entity. It communicates ideas and reports upon the financial condition, performance and overall capacity of the business.

In simpler terms accounting is a complicated way of explaining why a business firm is earning less money than their competitor. In order to explain such matters, the accountant uses certain tools.

The first and foremost important tool of an accountant is a complete set of financial statements that include balance sheet, income statement, cash flow statement and statement of changes in owner's equity.

Financial statements give an overview of the current financial standing of the business which helps in making sound and wise judgments.

Financial statements are the end product of accounting work. If Michelangelo has his Pieta and Tolstoy has his War and Peace, accountants have their financial statements - their masterpiece.

Conversely, there's always a misconception that accountancy involves complex mathematical procedures. Actually, you need not to be a math genius in order to digest accounting knowledge.

In accounting we talk in terms of money, we talk in terms of math - "real math."

Not algebra, not trigonometry, not elective.

You just need to have a critical and analytical mind plus a mastery of addition, subtraction, division and multiplication (which I assume you've already mastered since sixth grade.)

In understanding the art of accountancy, students, entrepreneurs and data-users alike should not take for granted the basic concepts of accounting. A good grasps of the fundamental accounting concepts should be maintained as it would serve as the foundation of higher accounting studies.

Generally, those who want to learn accountancy should first study and appreciate the conceptual framework of accounting -the basic notions and the fundamental premise on which the mechanical process of accounting is based.

The accounting profession is regulated by various organizations that also supply resources underlying assumptions, generally accepted accounting principles (GAAP) and conceptual frameworks, which is of course, available online.

The international governing body of accounting is the International Accounting Standards Board, (IASB) an accounting board that works for the uniformity of accounting principles around the world. It formulates and publishes public interest accounting standards in a yearly manual known as the International Financial Reporting Standards (IFRS.)

The IASB also provides fundamental resources for the study of accountancy that will help in further accounting studies.

Additional resources

http://www.iasb.co.uk/

http://www.accountingcoach.com/

http://www.fasb.org/home

http://en.wikipedia.org/wiki/Accountancy

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