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Accounting Is an Art and Not a Science - Essay Example

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The paper "Accounting Is an Art and Not a Science" is a perfect example of a finance and accounting essay. This report has drafted in a systematic and comprehensive manner to focus on the topic, the role of accounting in society along with critically examining the statement “Accounting is an art and not a science”…
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Extract of sample "Accounting Is an Art and Not a Science"

Table of Contents Particulars Page No 1.0 Introduction 2 2.0 Role of Accounting in Society 3 3.0 Accounting is an Art and not a Science 5 4.0 Conclusion 8 5.0 References 9 1.0 Introduction This report has drafted in a systematic and comprehensive manner to focus on the topic, the role of accounting in society along with critically examining the statement “Accounting is an art and not a science”. The report further look to use the knowledge of contemporary issues in accounting to focus on the aforesaid topic so as to ensure a better understanding of the topic under study. Initially the report looks to focus and discuss the role of accounting in society by critically evaluating the importance of accounting in terms of modern society and its dynamic requirements. The report than looks to discuss on the much debatable topic of whether accounting is an art and not a science where references has been made using real life examples finally a conclusion is provided to the debatable discussion by drawing empirical evidences from real world examples ensuring that the readers are both theoretically and practically exposed to the topic under study. 2.0 Role of Accounting In Society Accounting is concerned with collecting, analyzing and communicating the economic information generated. However, in order to understand the broader perspective of the role of accounting in society it is important to consider the same through a social perspective. Different individuals in the society coexist by maintaining and establishing relationship with one another. The society in a larger sense can be viewed by segmenting it into different groups which include economic, organizational and political arenas. Furthermore in order to ensure a smooth functioning of this different arena they need to communicate effectively which is indeed facilitated through accounting. Accounting provides information to serve multi purposes like for example, assisting the decision makers in making important decisions in context to effective allocation of scarce resources. Thus, we can analyze that accounting information acts as potent influence in the society which affects everybody in the society. Traditionally accounting has played a stewardship role as discussed and depicted by Morgan where he had used images of accounting as a part of historical record to demonstrate accounting as a mere extension of the owner’s personal memory. However, with time society and business practices has changed significantly and so has the role and impact of accounting on society (Croom, Romano & Giannakis, 2000). Global business has changed drastically along with the development of new concepts like ecommerce which has certainly made transactions more complex. This in turn has increased the problem of subjectivity and inconsistency in the application of traditional accounting techniques. These fundamental and significant changes have further given rise to new loopholes and manipulation and scandals which have a deep impact not just financially but economically over the society. Accounting further plays an important role in interfacing organizations and society. Accounting is an important tool for structuring organizational objectives, minimizing financial risks, making crucial financial decisions and helping organizations to provide information and effective returns on investment to different stakeholders such as investors, suppliers, customers etc which automatically creates a strong bond between organization and society and in strict sense between accounting and society. Accounting, acts as a common language between society, people and organization to communicate different information with the use of financial data. It provides information in the form of graphs and figuration which acts an important ingredient for people, organization and society to solve complex dynamic problems. Major role of accounting is certainly not just to satisfy the need of its respective user but has a great influence in the development of the whole society. The modern society is characterised with a set of different complex relationships which is not a set of simple collection of people. For instance, the price level of marketing aspect is an important part in the society where the increase and decrease of prices is directly related to an individual’s life and sustainability. Accounting information can certainly help the price levels to adjust appropriately as per people’s life. It is an important duty and task of the accountants to provide legible and integrated accounting information to the society as accounting information is recognized as an historic record for the society which in turn helps in the overall improvement and development of the society. False and incorrect accounting information is thus more likely to affect the influence of development of society and people’s daily life. Thus, accounting on one hand satisfies organizational, people and society needs and on the other hand influences and affects the development of society at large. The very concept of True and Fair view of the financial information through accounting is an integral and most effective tool for the overall growth and development of the society. Another perspective which needs to be eyed upon while discussing the role of accounting on society is the necessity for an organization to keep environmental aspects in mind and be friendly with the environment which again constitutes an important part of the society. It is due the increasing societal influence on accounting for which the organizations have to change their basic objective of profit making and shift towards social economic activities. Management practises such as mass production to achieve the benefits of economies to scale have increased pollution and unwanted use of scarce resources. However, with modern societal changes such issues have been much contented through the role of accounting and the pressure generated by society to minimize pollution and indulge in environmental accounting into the traditional management practices. Thus, to conclude, accounting certainly plays an important role in satisfying the user’s need in context to real life, organizations and society at large. Accounting in a strict sense is not just confined to bare communication of financial data but plays an important role in the system of macro control of the national economy to small issues of managing the salary of an individual. Accounting can certainly be regarded as the most important and significant tool in the overall development and growth of society at large. 3.0 Accounting is an Art and not a Science We had already looked upon the importance and role of accounting in society which has changed significantly owing to dynamic changes in the global business environment. However, the topic still remains much debatable of whether accounting could be considered as an art or a science. Let us now look at the same through the use of contemporary issues in accounting to find a solution to such a debate. Before we have a look at the much debatable topic to come to a final conclusion of whether accounting is an art and not a science. We need to critically understand the two basic elements of what exactly is the meaning of science and art. Science in strict sense can be explained as set of predefined principles or rules and knowledge where the emphasis is on experiments. Science is an enquiry into the relationship of cause and effect about the occurrence or an event of an activity. The knowledge of science is obtained by observation and continuous testing of certain facts which in turn is dependent upon well established laws and rules. Science is thus based upon rules, conventions, concepts and assumptions which when followed in a regular process leads to achievement of a desired result. However on the other hand, Art means a diverse range of human activities and a minute study of these activities which are most commonly misunderstood and confined to painting, film, photography, sculpture and other forms of visual media. Art can in no sense to just restricted to such activities and in strict sense means applying and using creative skills in any field. It is rather a study of implying the scientific methods to practical use. In a nutshell it is a process in which an individual does an activity in one own way using scientific application of methods to create a new creative result. Accounting has been described and explained by various authors in differing styles which makes a clear distinction of accounting as an art and not a science. The American Association Accounting (AAA) describes “Accounting as an art of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information”. Thus the very definition of AAA, has two basic elements or ingredients firstly it is an activity or an art where information in terms of financial data is generated secondly the communication of the same to the interested users who uses it for evaluating the performance, efficiency, effectiveness of the organizational process to come up to make important financial decisions and manage the economic assets and resources of the organization (Horngren, Wynder, Maguire, Tan, Datar, Foster, Rajan and Ittner, 2011). Furthermore although it is a systematic process but is regularly involved in communicating the measured, classified and verified data or information and the author clearly highlights that all persons or users of such information cannot be scientific persons. Furthermore the very process of communication, measurement, analyzing and interpreting although are based on scientific rules or procedures the real judgement lies upon individuals own talent and art. Accounting is further more of an art as it represents the financial findings by following and applying the universally accepted accounting methods and principles (GAAP). It is more of an art as the established rules and principles are applied in the process of book keeping and economic entity. Although the process and methods used in the function of accounting can be underlined as science, however, the real use of such raw data and making decisions and estimations of such information is clearly an art (Atrill and McLaney, 2006). The word “Art” is more appropriate for Accounting as every intended user or accountant has their own different qualities, traits and attitudes to view the entire accounting system and the user prefers its own way of conservative style. The accounting information is further influenced by the personal judgement and observations of the accountant making it more of an art than science. An art is more of a practice and not mere listening to predefined scientific rules which can certainly vary in differing situations which is more often in the case of accounting making it an art and not a science. Accounting as an art is that part of knowledge which enable it users to reach a definite goal or objective and reflects the correct path to achieve the given objective in the most appropriate manner. Since accounting on a regular basis has to deal with different situations in varied kind of organization, it had been impossible to fix scientific or predetermined rules and procedure applicable as rocket science in all situations and thus has to rely upon individual’s own experience and knowledge of accounting making it an art of applying strict knowledge to come to conclusive results. Accounting in no sense tells the user of a pre-determined manner in which special objectives can be achieved. Accounting is thus explained as an art of recording, classifying and summarizing information in terms of money events and character interpreting the results thereof making it more of an art than science. To further conclude that accounting is an art and not a science is the reality of accounting dependent upon technique whereas science depends upon the application of scientific methods, rules and procedures. The very system of double entry bookkeeping lags a basic hypothesis which is either proven or fails and constitutes the main element for science. This is not the case with accounting as there is no such hypothesis ever generated. The heart of the argument lies on the simple basic fact that accounting is more of a workable technique requiring special knowledge and skill of the user to come to a final conclusion and in no sense is just dependent on a set of predetermined rules, procedures or proven experiment results or rather on a scientific method making it an art and not a science. 4.0 Conclusion The report looks to highlight upon the current role of accounting in the fast and dynamic society by focusing on the importance and relevance of accounting in society through real life examples. The report also provides a conclusive evidence of the fact that “accounting is an art and not a science” by applying the knowledge of contemporary issues in accounting and ensuring a practical and theoretical edge to the topic under study. 5.0 References Atrill, P. and McLaney, E. 2006. Accounting and Finance for Non-Specialists, 5th Edition, FT Prentice Hall Croom, S., Romano, P. & Giannakis, M. 2000. Supply chain management: an analytical framework for critical literature review. European Journal of Purchasing & Supply Management 6, 67–83. Horngren,C., Wynder, M., Maguire, W., Tan, R., Datar, S., Foster, G., Rajan, M. and Ittner, C. 2011. Costing Accounting: A Managerial Emphasis, 1st Australian Edition (Revised), Pearson Australia Read More
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