Business Law in Accounting

Topics: Contract, Accountant, Accountancy Pages: 3 (799 words) Published: May 9, 2011
Business Law in Accounting
Melissa Randall
Business Law I / 421
Professor Deborah Gronet
March 16, 2009
Business Law in Accounting
Accounting is the system of recording, reporting and verifying financial information for individuals and businesses, including income, expenses, value of assets, and so on. However, Business Law I, takes what is normally known of accounting and moves into another arena, one which includes civil and criminal liabilities, contract law, ethics and the Sarbanes-Oxley Act of 2002. By establishing the basics in Business Law, accountants are able to understand the risks of their particular profession. Accountants are faced with civil and criminal liabilities which are based on the accountant’s ability to do his or her job effectively and legally. Accountants face civil liabilities when they do not complete the work satisfactorially to what was agreed to. Even “Codes of Ethics” urge accountants to not agree to do work that they know they do not have the knowledge or time to complete. Competency is a key element to being a successful accountant, and not meeting competency goals can cause problems for young accountants entering the field. By understanding the basics of contract law, it is easier for accountants to find the necessary information to allow them to do their jobs competently. If accountants know that it takes mutual consideration, or a “meeting of the minds,” to begin contract negotiations, then they can figure if they are reviewing a contract, some type of mutual consideration must have occurred, as well as a proposal and acceptance portion of the conversation. Also, if an accountant knows that the contract is for the sale of goods, then the accountant would know that the UCC Article 2 has to be used, instead of simple contract law. Knowing this would help the accountant understand how the asset or products purchased needed to be accounted for, because without detailed information in the contract,...

References: Mallor, J. P., Barnes, A. J., Bowers, T., & Langvardt, A. W. (2007). Business Law: The Ethical, Global and E-Commerce Environment. [Electronic version]. New York: McGraw-Hill Companies.
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