Question

Why is accounting important? Who governs accounting? How consistent is accounting among companies in the same industry? Why do we care as a society about accounting rules?

Please cite two or more resources

Answer 1

Accounting is the basic tool for recording, reporting and evaluating economic events and transactions that affect the business organization. Accounting is important because it provides a lot of information that business owners, managers, and investors need in order to evaluate the financial performance of the company. An understanding of financial data such as Income statement and the Balance sheet is required to get a clear picture of businesses true financial well being.

The Financial Accounting Standard Board (FASB) established in 1973 is an independent, private, non-profit organization governs accounting practices and the preparation of financial reports in the United States.

Accounting is relatively consistent among companies in the same industry perhaps their is a slight variance in some areas where values are permitted to be estimated values rather than actual values or in areas such as how depreciation is accounted for and to compare themselves to their competitor's companies would want to utilize the industry standard accounting methods in order to review their performance against their competitors.

Accounting is the backbone of the financial world. Accounting rules are important because is the only way for a business to grow. Accounting rules are crucial in order to ensure companies are operating Ethical. The companies must report their financial information. With the help of financial data, we can analyze companies records to ensure these companies are running in an ethical way. GAAP principles also allow investors and lenders to examine the financial stability of the company so that they can make wise decisions.