Accounting or accountancy is basically the measurement, reporting, processing and communication of information about non-financial financial activities of financial and/or non-financial organizations including corporations and businesses. In simple terms, it is a branch of accounting that concentrates on the systematic recording of financial transactions for decision-making purposes. These activities are performed by accountants, bookkeepers, auditors, and internal accounting personnel. The accounting profession is prevalent in all countries.
There are various types of accounting, which are broadly classified into two broad categories: Managerial accounting and Business accounting. With the growth of the business world, a new term called Accountancy became essential, to distinguish between the different techniques used in accounting. Nowadays, almost every organization uses some technique or the other to keep track of its financial activities. For instance, the bookkeeping or administrative accounting methods are used by companies to manage their daily financial activities.
Accountancy has three sub-disciplines, namely cost accounting, market analysis, and financial accounting. The cost accountants calculate the costs associated with the assets and operate through the resources. They can use these resources to determine the costs involved in production, acquisition, development, and disposal of assets, as well as the future success of the organization. This involves physical and financial investigation to determine the cost structure, material and labor estimates, and production and sales mix. All of these aspects are needed to properly assess the financial strength and viability of a company.
Market analysis is the second sub-discipline of managerial accounting. Its objective is to provide information needed for developing business decisions. The market analyst must be skilled in analyzing market situations and the behavior of the major players to understand the demand and supply situation of a specific product group. They must also determine the competitive advantage of the company, identifying specific problem areas, and work towards solving these issues. Market analysts will usually require solid training and expertise in finance, economics, law, management, marketing, distribution, and other relevant fields.
The third sub-discipline of managerial accounting is financial accounting. Its objective is to make decisions, while using the information derived from the first two sub-disciplines to make decisions. This type of accountant analyzes information to make decisions on inventory control, budgeting, financial planning, and financing. They will require solid mathematical skills and be able to make detailed presentations.
A qualified accountant should have a strong background in mathematics, preferably having completed an associate’s degree in accounting or a similar course. A solid understanding of statistics, management and other relevant subjects is also important. The ability to analyze financial information, computer applications, and financial statements are a must. In order to maximize profitability, a successful accountant must not only understand the material within the accounting documents, but must also be able to interpret the data obtained.