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Accounting Methods Holding Back Businesses

Practicum Accounting Are your accounting methods holding back your business?

This article by Mendelsohn (2016) focuses on the increasing irrelevance of Generally Accepted Accounting Principles (GAAP). According to the author, GAAP accounting standards have lost relevance over the last four decades in large part due to the evolution of business models. Today, business models are substantially driven by intangible assets such as brands, intellectual property, and information systems as opposed to physical assets. Under the conventional accounting system, these assets reported as regular expenses, often leading to the misstatement of assets and earnings. Firms like Amazon and Tesla are ideal examples of how GAAP standards do not accurately reflect intangible assets.

8 accounting to-dos for your end-of-the-year checklist

In this article, Morantes (2016) reiterates the importance of having an adequately staffed accounting department. Using the example of the city of Spoken, Washington, which experienced severe accounting problems in 2014 due to an understaffed accounting department, Morantes argues that a well staffed accounting department is a priority for any business organization. Adequate accounting staff is crucial for ensuring proper double-checking of internal operations, full payroll compliance, timely collection of receivables, full adherence to the relevant accounting standards, and accurate...

In essence, a well staffed accounting department ensures the avoidance of errors that could lead to revenue miscalculation, expenditure overstatement or understatement, and inaccurate debt monitoring.
5 trends driving disruption in the accounting industry

According to Edwards (2016), technological advancements have led to significant shifts in accounting and bookkeeping. As technology evolves, there has been greater demand for connectivity on the part of clients, increased automation of data entry, more adoption of machine learning technologies, and increased demand for specialisation. Further, with the emergence of numerous accounting applications, many small businesses are shifting to the do-it-yourself (DIY) approach. These trends are changing the way accounting and bookkeeping is done and even affecting the demand for accounting services. Indeed, Edwards notes that there is likely going to be a new accounting industry in the near future.

Getting the most from your accountant means more than just doing your taxes

In this article, Peacock (2017) argues that the role of an accountant in an organisation involves not only accounting, bookkeeping, and tax compliance, but also strategic assistance. She points out that accountants can offer valuable insights on aspects such as resource utilisation and product/service performance. These insights can go along a…

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References

Burdick, M. (2017, August 17). The accounting industry death is great news for your business. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/298649

Edwards, S. (2016, September 23). 5 trends driving disruption in the accounting industry. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/281931

Entrepreneur Staff. (n.d.). Accrual accounting. Entrepreneur. Retrieved from https://www.entrepreneur.com/encyclopedia/accrual-accounting

Mendelsohn, S. (2016, September 7). Are your accounting methods holding back your business? Inc. Retrieved from https://www.inc.com/steve-mendelsohn/are-your-accounting-methods-holding-back-your-business.html?cid=search

Morantes, G. (2016, December 20). 8 accounting to-dos for your end-of-the-year checklist. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/286807

Peacock, K. (2017, August 2017). Getting the most from your accountant means more than just doing your taxes. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/279588

 


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