Before we start, let us understand the meaning of Accounting– “It is the art of recording, classifying and summarizing in a significant manner and in terms of money, transaction, and events which are, in part at least, of a financial character and interpreting the results thereof.”
Uff! Accounting is so difficult!
But the question is why do I need to understand this? Remember, “Life is like accounting. Everything must be balanced.” Now, let us see how.
First of all, it’s a skill that we use regularly in our daily life. Though accounting is an essential part of the business world, we do perform some types of accounting in the real world. You must be wondering, when and how?
Here is the list of some accounting tasks which we do without even realizing:
1. Reconciliation of Accounts: Most of us like to know how much money is spent and what is the current balance. We cross verify the bills and receipts of the payments, to check if all the expenses were correctly charged. In accounts we call this process ‘Reconciliation’.
2. Manage your spending through accounting technique: What happens if you spend more money than you have? Have you ever encountered such a situation?
When you overspend, you are left with a zero or negative balance, and finally, you will end up paying extra banking charges. People usually use the budget as a technique to prevent this. While creating a budget you must check your income and expenses.
An accountant will also do so for an individual, or organization, but with a motto of profit maximisation or wealth maximisation.
3. Future planning: We all know that the future is uncertain so people should plan properly for kids education, health, vacations, a home or a car. We all need to plan ahead, so that our future will be financially secured.
Accountants also work with the same process of maintaining and expanding the financial health of the organization through various modes like investments, savings, and debt control.
4. Comparison: It’s a practice we all have used from our school days, where the grades were compared with our friends. It helps us in evaluating our present standing and in scoring better grades in future.
Accountants also do this by analysing the weak spots and look for ways to improve the numbers.
5. Revolutionize Everyday Skills into a Career: Sometimes people call accounting as a dry career but in reality, it’s not. We all know that finance is considered as the backbone of any organisation or lifeblood for all kinds of business whether small, medium or large. Just like how blood is important for us, similarly finance is important for business to survive. Money or finance helps in meeting the day-to-day requirements and is required at every step of the business. So, it’s known as the ‘lifeblood’ of the business.
According to the Bureau of Labor Statistics, the job growth outlook for accounting is 21% faster than average. According to a study conducted in 2018 by the Journal of Accountancy, the demand for accounting grads has reached an all-time high. When you pursue accounting, it not only increases your chances of finding a job after graduation, but there are also many other benefits of earning your accounting degree.
So my dear friends, next time if anybody says accounting is tough or not my cup of tea then please use the above-mentioned examples to make them understand that unknowingly we all are using accounting in our daily lives.
Happy Accounting !!!