The Role of Accounting on Business and Our Society Research Paper

The Role of Accounting on Business and Our Society - Research Paper Example The balance sheet is the most effective tool in communicating the financial health of a business. The balance sheet reveals the financial position of a business and reports the assets, liabilities, and owner’s equity as at a given point in time (Allee & Yohn, 2009). This financial statement also reveals the resources that remain unused at the end of the period and available for use in the following periods. Additionally, the balance sheet reports the claims for resources that remain unpaid at the end of the period and the capital represented in various forms it is constituted. The functions of accountants include recording, analyzing, and reporting the financial status of a company or a person. Either an accountant or a certified public accountant can perform accounting. Accountants do not legally have to acquire any degree or any form of accounting license for them to perform their duties; any person over 18 years old and is good in numbers can be an accountant (Seetharaman, Sun & Wang, 2011). A certified public accountant must earn an accounting degree from an accredited institution, pass the CPA Examination, pass the professional Ethics Exam from the American Institute of CPAs, and work for 1,800 hours in one year under supervision of a licensed CPA. The accounting function in the organization is critical because it enables identifying, measuring, and communicating economic information to permit informed judgments and decisions. However, the accounting function is expensive to maintain because of high costs of installing systems and paying salaries and wages for accountants. I would prefer to form a merchandising company to a service company. Charts of accounts provide a list of all accounts in the company’s system (Seetharaman, Sun & Wang, 2011). Merchandising company charts of accounts have more code numbers than the charts for service industry. Charts of accounts in a service industry provides a list of