Toribio, Hannah Jane

Section C33

Accounting is said to be one of the hardest courses in the world however being an accounting
major can create well-informed decision-making skills in the money market with dependable
manifestations of the results of a company's prior decisions. Learning accounting is a crucial
part in managing a business since it will help you in tracking income and expenses and provide
stakeholders with quantitative financial information which will be used in making business
decisions. Managing the finances is one of the most important roles in a company since for the
company to be successful, it needs to be profitable. However, it seems that there are other
ways in making the company successful like marketing. Marketing is a way of promoting and
selling the product and with that, the sales of the business will escalate however, marketers
can’t always keep track of its financial affairs which is why an accountant will manage the
finances. Money is known to be the lifeblood of a business since generating money from its
activities can meet its expenses and have enough earnings for the company to grow.
Accounting is the language of business that helps managers and executives in communicating
the business' financial and economic information to shareholders and creditors.

If my friend wants to start an online merchandising business this year, as a student who
studied accounting, it would be best if he/she knows the basic accounting principles, accounting
terms, accounting equation as well as how to make the financial statements. Accounting
principles are important since they provide the rules and guidelines that companies must follow
when reporting financial data. Companies need to share their financial information in a way
where it is acceptable and understandable to its stakeholders. I would say” Learning the
accounting principles serves as an important function since it makes sure that companies and
organizations can't cheat on their financial reporting statements. These principles are known as
the GAAP or Generally accepted accounting principles which allows investors to evaluate
companies easily by reviewing their financial statements. It provides easy communication and
mutual understanding to consumers, investors and/or the government.”

Another topic that I can give advice is the basic accounting terminologies and the accounting
equation. Learning the accounting terms would make it easier for my friend to understand what
is going on within the financial sector of the business. It can make the person be able to
understand the various accounting terms used in an accounting software like how the data
about purchase and sales is recorded, how the profits are arrived at, what are the kind of
expenses a company and etc. I would say that “Not knowing and fully understanding the basic
accounting terms would make it hard for you to grasp the situation if there is something wrong
with the financial statements of the company.” It is also essential for executives to know the
basic accounting equation to ensure that the left side and right side of the accounts are
recorded accurately. It can also be used by investors or lenders to evaluate the company’s
financial situation. “I can say that the accounting equation is quite easy to understand since it
serves like a mathematical equation with a basic mathematical operation wherein the assets or
the company’s resources is equal to the sum of the liabilities, the company’s debts, and the
equity, the amount of funds invested in the company.”

Lastly, I would also advise that he/she would learn how to make the financial statements.
Financial statements contain significant information about the financial welfare of a company. It
helps companies make informed decisions regarding the profitability or the debts of the
business. It is important to know how to make the financial statements since it provides insights
about the company’s operations, performance, and cash flow. I would say that “Financial
statements are the reports that could help manifest success and growth for the company. For
example, the balance sheet shows the financial position of the company and provides detailed
investments of the company's asset investments, debt, and equity levels. The income statement
helps investors in assessing the past performance and future cash flows of the company. If you
do not learn how to make the financial statements, it would be hard for the future investors and
you, as the CEO, to make informed business decisions for the company.”

To conclude, accounting may be hard however, if you learn the subject, it provides you with the
skills to be accurate, transparent, and competent as a business leader. It helps you understand
the situations and avoid taking risks that can harm the company as well as provide
knowledgeable and critical decisions for the financial health of the business. They say that “You
can’t have a rainbow without rain” indicating that one will always have a hard and tough
process to ensure success.
References:

Badia, M. (n.d.). 1. Accounting: The language of business - Course overview & week 1:
Introduction to accounting - The balance sheet | Coursera. Coursera.
https://www.coursera.org/lecture/financial-accounting/1-accounting-the-language-of-
business-SO1m8

Huds, D. (n.d.). Differences between accounting and marketing. Small Business - Chron.com.
https://smallbusiness.chron.com/differences-between-accounting-marketing-30521.html

Importance of financial statements. (2020, July 21). WallStreetMojo.

https://www.wallstreetmojo.com/importance-of-financial-statements/

Staff, M. F. (2016, May 15). Importance of accounting principles. The Motley Fool.
https://www.fool.com/knowledge-center/importance-of-accounting-principles.aspx

Thangavelu, P. (2020). Why cash management is key to business success. Investopedia.

https://www.investopedia.com/articles/investing/041515/why-cash-management-key-
business-success.asp

The role of accounting in business and why it’s important. (2019, February 19). CPA Firm
Tampa. https://www.pdr-cpa.com/knowledge-center/blog/role-of-accounting-in-business

Why is knowledge of the accounting term and concept useful to a person other than
accountants? (n.d.). Quora - A place to share knowledge and better understand the world.
https://www.quora.com/Why-is-knowledge-of-the-accounting-term-and-concept-useful-to-
a-person-other-than-accountants