ACC205: Principles of Accounting 1
June 13, 2011
What makes a large organization like Wal-Mart financially successful? One could say it is the result of outstanding personnel or perhaps a strong determination to succeed. These factors certainly contribute. However the key to financial success in organizations lies in good accounting. Since early civilization began, accounting has been an important part of our financial transactions. In today’s world our use of modern accounting systems and accurate financial statements are critical components that make modern organizations successful. To facilitate understanding of this point one must understand how modern accounting systems have changed organizations, why accurate accounting is important, and how both factors contribute to organizational success.
As already mentioned, accounting is by no means a new practice. Archeologists have revealed that early civilizations used forms of accounting in their societies. (Accounting History Page, n.d.) One of humanities most crucial periods of progress in history, the renaissance, saw the advent of more complex accounting systems created by Luca Paciolli. After the renaissance, accounting continued to progress and advance. During the tremendous stock market crash of 1929 and subsequent Great Depression gave rise to more complex and standardized accounting procedures. These new procedures grew ever more complex, requiring organizations to possess more staff that were better trained, and more knowledgeable than before. Still, there was only so much that humans and paper alone could accomplish. Indeed this all changed with the introduction of the personal computer and information technology to the workplace. Modern organizations have been profoundly changed as a result. Accounting in practice has many facets, payroll, inventory, taxes, money accounts, and liabilities… just to name a few. Before the aid of computers these tasks were arduous and required a good deal of man power in larger organizations. Modern computer software alone has impacted nearly all areas of accounting. “Accountants often use a work sheet—a document with several columns—to summarize data for the financial statements.” (Horngren & Harrison, 2007, p. 197) With modern software like Microsoft Excel, mathematical functions are built into sheet the allowing for automatic processing of formulas. However, Excel is only a basic program. Many software companies have built programs that offer an entire suite of accounting tools that streamline an organization’s accounting functions. A good example would be Sage Peach Tree accounting software. These programs incorporate every function of an organizations accounting into one program and can be tailored to meet specific needs. Accounting software allows for an organizations accounting function to be more flexible, more compatible, and extremely flexible. The difference that modern organizations experience with modern technology can be summed up in cost/benefit.
As technology provides modern organizations with many autonomous functions that previously were handled by people, new workplace dynamics emerge. The accounting software previously mentioned, Sage Page Tree, comes at an affordable purchase price of $299. (Sage Peachtree, 2011) When you compare this with the average wage of an accountant, $29,928 - $60,777, the difference is staggering. (Salary Snapshot for Accountant Jobs, 2011) Modern organizations can now rely on fewer accounting employees by integrating accounting software that in turn results in lower expenses with greater streamlining, standardization and accuracy. When you consider the information flexibility the internet provides when combined with the features of software, it becomes apparent that modern technology acts as a force multiplier that allows one employee to do the work of what previously...