Pros and Cons of Accounting

Accounting is the measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations. The main importance of accounting is to accumulate the report on financial information about the performance, financial position and cash flows of a business.

The essential features of accounting include receivable, payable, financial close, time and expense capture, fund accounting and revenue recognition.

pros and cons of accounting

Pros of Accounting

  1. Potential for professional growth

After someone is through with the course will start working at junior levels and after some time the accountant will have grown to higher levels hence there is potential growth in the profession. This will make the country to produce highly qualified professionals in the field of accounting.

  1. It is a stable and growing job field

Every business needs the skills of accounting and this makes it relevant for the profession as it is a stable job field where someone cannot miss the opportunities to work. Most businesses require the services of accounting for it to tell how the business is running.

  1. Complete and systematic records

Through accounting business can keep its records in a systematic order hence easier to retrieve information about the business.sss

  1. Valuation of the business

When a business does accounting it may be in a position to tell the value of the business as it will be able to calculate the amount that is invested in the stock and the profit gained from the business.

  1. Helps in the determination of selling price

After the company has worked out the expenditure on the production of a commodity it will be able to determine which price the commodity should be sold at for it to earn some profit and all this requires the skills of accounting.

  1. Effective management

It is easier to manage a business that has accounting statistics as it will be able to know whether there is a loss or a profit from it.

  1. It enhances auditing

When there is accounting done in the business, they will issue a certificate of auditing and this will show that there are no irregularities in the running of the business.

  1. For easy comparison

Through the information gained from accounting, it will be easier for the firm to compare itself with similar firms hence improving its productivity.

  1. The law requirement

The law requires the business entities in the country to do account for their business hence it has to be done.

  1. Helps to acquire loans

The firm can easily acquire a loan through the information on the accounting of the business as it will be able to tell the value of the business hence it can be used as a security to get the loan.

Cons of Accounting

  1. The information is based on the estimates

The information from accounting is not the exact value hence the firm may not be sure of the value of the business.

  1. Fixed assets are recorded at the original cost

The fixed assets normally depreciate with time hence when it is calculated with the original cost it does not give the exact value of the asset.

  1. The information may be biased

The accountants can work around with the figures and decides to give biased information to the owner of the business hence not helping the business person.

  1. The information is expressed in terms of money

The information on the accounting is normally based on the monetary value and this may make the other assets not to be valued exactly.

  1. Manipulation of the accounts

The accounts can be manipulated to give the positive feedback from the business hence not calculating the losses that are incurred in the business.

  1. The information can be wrong

The accountants may give wrong information about the business for them to be paid which will eventually affect the running of the business.

Summary

Every business must do an accounting of its business as it will be able to know the value of the business and this can make it possible to acquire loans from other financial institutions that can be used to expand the business.

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