The accounting process and its influence on the company's profitability
Written by:Diomer Antonio Galán Rincón.
Bachelor's Degree.Public Accounting / MSc.Science of Higher Education.
Author: @dgalan,through Power Point 2010 tool, and using public domain image Pixabay
Every organization or entity must recognize its profitability in economic and financial terms, among others, which is why accounting processes must be rigorous, since the flow of assigned and required information is of utmost importance for decision making. In this sense, the profitability of the entities depends on different factors that are directly related to the quality of the management of the accounting cycles.
Through time, accounting has been adapting its rules and principles, as well as its conceptualization, processes, and valuation and recording mechanisms, according to the modern events of the administrative, financial and economic globalization of recent years, being a determining element in the course of powerfully profitable entities in the commercial or business environment.
Image taken from:Pixabay
From this point of view, the accounting processes have accompanied the economic management of the entities, incorporating diverse ways of quantifying financial or economic values, assuring their patrimony and usefulness.
Hence, Miranda and Oviedo (2017), explain accounting processes "as a system are adapted to classify the economic facts that occur in a business, in such a way that they become the central axis to carry out various processes that will lead to obtaining the maximum economic performance". For this reason, it is of utmost importance the proper management of the actions and records, since their speed depends on the objectivity and presentation of reasons in the entities.
Image taken from:Pixabay
In this particular, entities in Venezuela are governed by International Accounting Standards (IAS1) (2006), which states that they "constitute a structured representation of the financial situation and financial performance of the entity. Their general information purpose is to provide information about the financial position, financial performance and cash flows of the entity". In effect, the accounting act must provide the entity with data that allows it to know its profitability.
To conclude, we can say that accounting processes require analysis, since the effective path of economic profitability and the obtaining of truthful information that favors the achievement of positive decisions that optimize the quality of the accounting cycle in the entity to be developed depend on them.
I hope you like my article and I would appreciate all your comments.
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Hi @dgalan
You touched on a nice topic that is very important for any business.
Yes, its a must for any organization to have their accounting done to have a better picture of overall growth and to figure out that how much they are earning or losing. Surely accounting concepts are important and if not followed then it will be difficult to run a business. Nice post my friend
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Thank you for your support
Greetings @ alokkumar121. Certainly friend , accounting allows you to have a certainty of what you are gaining or losing in a given period , being able to have that information for managers is essential , because they can realize how the company is running with the objectives set.
Thank you very much for commenting
Hi @dgalan
I am left with this that you mention "purpose of general information is to provide information on the financial situation, financial performance and cash flows of the entity", a little to understand the managerial utility of this accounting area.
Best regards, good luck.
Greetings @ lupafilotaxia
The main function of accounting is to provide information to managers or owners of companies, for decision making of any kind, whether administrative, economic or financial. As well as they can project, applying management indicators and risk the future of the company in certain economic operation.
Thank you very much for commenting
Greetings @dgalan.
The information obtained by the accounting processes, are the main sources of information of the companies, which allow you to make decisions that improve the economic profitability that can generate the company, for this to be achieved must be present, that the accounting processes have all the required information, in order to make the right decisions according to the information obtained by the financial statements.
Greetings @chucho27. I fully share your position my dear, through accounting reports we can also make some administrative and economic decisions that will benefit not only the company but also its workers.
Thank you very much for commenting
For every company eying success in its own field. Proper accountability is needed. Information is provided to deal with the areas the company is lacking and the way the company can improve. The accounting process can't be denied
Greetings @ mandato
accounting gives you tools to be able to have control of each of the departments of the organization, such as cost accounting for companies that perform manufacturing processes and also the audits that are essential for verification of compliance with accounting and administrative processes among others.
Thank you very much for commenting