Individual Business Case: Beyond Repair

Individual Business Case: Beyond Repair

Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business. It is considered as the language of business as it is the medium of communication between a business firm and the various parties interested in its financial activities. For that reason, accounting remains as one of the key functions for almost any business.

Since accounting is the medium of communication for a business and its stakeholders, the financial statements prepared are crucial for the decision making process of the parties interested or involved with the business. Consequentially, the trial balance directly affects the financial statements, so it would be safe to say that the actions of Ms. Mavi may influence the users of accounting. Although the amount of P 5,000 is relatively small, it would still be enough to influence some of the internal users of accounting. The first party negatively affected would be the other accountants, as accountants rely on trial balances as a working paper which serves as a basis while preparing financial statements. An error in the trial balance may result to an error in the preparation of financial statements. The danger is that it may spark a domino effect which may result to a miscommunication among the stakeholders of the business. The second party which may be negatively affected are the managers, as they in turn, rely on financial statements to manage the affairs of the company by assessing its financial performance and position. Managers the information presented in financial statements in order to make important business decisions. Although unlikely, the other parties which may be affected are shareholders, potential investors, and other external users. In this case however, the amount tampered with may be too small to make an impact with the aforementioned users.

If I were to give counsel as to what Mavi should do, I would advise her to find and correct her mistake then come clean to the proper authorities involved. It can only serve as a lesson learned for the next time she would have to prepare a trial balance. It would have also advised her to ask for help with the senior accountants during when she was still trying to meet the deadline.

To conclude, accounting is a function which is crucial for any business. It is crucial to the development of a business. As a direct result accountants play a huge role in determining the prosperity. The proper recording of the economic transactions that businesses deal with, lies on the accountant’s shoulders. Any mistake may directly or indirectly affect stakeholders within and outside the company. That is why accountants must be able to deal with that amount of workload. As a the major decisions concerning any business heavily relies on the correct preparation of financial statements.