Accounting is how your business organizes, understands, and records its financial information. One can imagine accounting as a huge machine that carries raw financial data into the form of taxes, projections, business transactions, etc. After that with the help of these recorded data or information, you can easily understand the whole picture of the financial stage of our business. Accounting helps you to know about you whether you are making a profit or not, about cash flow, the current value of your assets, and liabilities. These are the parameters that reflect your business growth.
As time changes and traditional methods of business are constantly changing, contemporary issues in accounting are highly visible. Contemporary issues are those issues that are currently affecting our business world like online business, online marketing, or digital marketing. These issues can either be positive or negative. It all depends on the current economic conditions and new/existing business and tax laws of the concerned country and the global economic situation. Accounting is the key to business, without this, one can’t imagine the business. It is a vital part and plays a major role in the individual and public sectors. Before moving ahead we need to understand the cycle of accounting. It will help you to differentiate between old and contemporary issues in accounting.
The Accounting Cycle
The time you enter into business, accounting begins. Every action and activity related to money that directly related to profit or loss. Recording a business transaction is a very important aspect of accounting and it is similar to bookkeeping. Bookkeeping is the 1st step of what our accountants say is the “accounting cycle”. A method to create raw financial information and present a consistent and accurate financial report. It carries 6 steps:-
- Record and analyze money transactions.
- Post transactions to the record.
- Prepare an unadjusted trial balance.
- Prepare to adjust entries at the end of the year.
- Prepare an adjusted trial balance.
- Create financial statements.
7 Main Contemporary Issues in Accounting
Daily developing opportunities and challenges probably impact the accounting profession in the upcoming future. A Professional business requires the modern finance expert to contribute to much more than just the numerical values.
- Sustainability:- Conventionally, there has been little concern regarding sustainability. But now as the world is rapidly changing it recognizes the limited nature of various resources and social issues which stop the growth rate.
- The Challenges of Circular Economy:- Circular economy is foundational characteristics and talked about the accounting information. It allows the barriers and enablers to the transition from the recent linear model to a circular economy.
- Technology issues in Accounting and Finance:- From the time of human history, we have seen new and different ways of working, that create fundamental changes in the way of doing business and living. Artificial intelligence replaces all the traditional methods of business and accounting.
- The Contemporary Corporate Tax Strategy Environment:- A material cost for companies is known as corporation tax. Corporate tax is part of fiduciary duty to shareholders; directors need to establish CTS that reduces their cost. CTS was the traditional focus of companies. At the same time, globalization has emerged as a rich new tax planning opportunity, but the aggressive misuse of such chances has led to intense public scrutiny.
- Corporate Reporting: From Number to Narrative:- As you can see the changing scope and shape of the corporate reporting function. It is time to focus on the inclusion of narrative content in the financial report. Reporting envelope terms such as environmental reporting, corporate social responsibility, and non-financial information.
- Need to Measure Performance:- It is the necessary and interesting part to measure and analyze the performance of a business that helps to allocate resources carefully in the future. Measuring performance is the way to find out the whole picture of your organization and your outcome from the invested money.
- New Challenges in Audit:- It is the way to see the impact on the upcoming years and need to discuss the steps audit firms may need to undertake to deal with the challenges. Here the primary focus upon the need to increase audit quality as an overarching principle.
In the present time, the picture of the business and accounting world is totally changing, the conventional methods of business have been replaced by new and innovative methods. In conventional methods storing data, records and information is such a difficult and lengthy process but as of now, the technology makes it sure simpler work. This is all about the change that is the constant thing on earth. As we move towards the new world where businesses are the biggest pillars of the economy hence it natural that we would surely face some contemporary issues in accounting that do not creates any hurdles for us but give us the opportunity to learn from this and make a productive growth that increases profit and gives 100% outcome from the input.