Understanding the Nature of Accounting


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Just like various things and various other scientific fields on this earth that have their own characteristics or nature, accounting also has an image or description so that it can be easily recognized.

There is a saying that says, "don't know then don't love". Therefore, to be able to love accounting, it is necessary to first know the characteristics of accounting. Launching from Dwi Harti (2018) in his book entitled "Basic Accounting", there are several characteristics of accounting as follows.

First, accounting as an ideology. Some parties assume that accounting is a tool to legitimize the conditions and social, economic, and political structures of capitalism.

Conventional accounting is indeed based on the ideology of capitalism because the financial statements prepared by the company's management aim to provide information to the owners of capital about their investments and economic actions. This is so that the owner of the capital increases his wealth.

Second, accounting as a language. If you pay attention, accounting has terms or symbols (lexical) and grammatical rules which are its characteristics. Some accounting symbols include debit credit, general ledger, trial balance, profit and loss, assets, liabilities, and so on.

Accounting has rules so that it can be easily understood, for example rules regarding the placement of posts based on liquidity, rules for revenue recognition, cost recognition, book-entry processes, actual, and others.

Third, accounting as a historical record. In this case accounting as a means to describe transactions that occurred in the past. Transactions that occurred in the past are recorded, recorded, and reported through financial statements.

The data on the past is the basis for analysis. Accounting is a tool for financial predictions to understand the possibilities that will arise in the future.

Fourth, accounting as an economic reality. Accounting is considered to provide an overview of the economic reality of the company at this time so that the accounting report is considered to provide an overview of the current economic conditions.

Fifth, accounting as an information system. Accounting is also classified as a method or technique that describes the relationship process between data sources and recipients of information through communication channels. Through the accounting cycle, the financial statements can be used by the public for the decision-making process.

Sixth, accounting as a commodity. Accounting output in the form of financial statements is one of the important commodities for economic decision making. By understanding financial statements, it will make it easier for some parties to make better economic and business decisions.

Seventh, accounting as a system of accountability. With the existence of accounting, the resources managed by an entity can be easily identified and traced inflows and outflows. Therefore, accounting can be used by managers of an organization to account for their performance to all stakeholders.

Eighth, accounting as a technology. If considered as a theory, then in order to be used to influence the social environment, accounting must be processed into technology first. The technology has both theoretical and practical dimensions.

Technology can transform an input material into a form of output that has a higher benefit value. Technology is of high quality if it is able to provide benefits to efforts to achieve the expected social goals.

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