IRS Tax Information – The Basic Function Of Accounting
The Basic Function Of Accounting
Accounting is a profession as old as the hills. It was a well known practice in the Roman, Ancient Egyptians and Greek civilizations. In these times, the main function of accounting was to collect facts and figures to protect the interests of the owners. After the fall Of the Roman Empire up until the fourteenth century there was decline in the interests of accounting due to the lack of international trade. There was much conflict between countries, government, churches and the people and the arts suffered accordingly.
It was about the time of The Renaissance that the principles that form the basis of the modern accounting system were developed, double entry bookkeeping. Financial statements made an appearance in the fifteenth century and the Industrial Revolution in the nineteenth century blew old accounting practices right out of the water.
Organizations and the structure of business ownership were overhauled according to the needs created by the changes in society. The size of organizations grew and with it the advent and growth of collective ownership. The function of accounting was no longer to protect the interests of the owner of a business but to provide financial reports to shareholders of a company and external users outside of the business. With the growth of these organizations came the evolution of the managerial role of accounting in the decision-making and planning processes necessary for the future development of companies.
In recent times, the most significant changes to affect accounting has been due to the advancements made in computer technology. This has enabled the production of more accurate information, saving lots of time and money and has been suitably dubbed the Information Age.
Today, one o
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f the main functions of accounting would be to communicate this financial and business information to interested users within and outside of the organization. The information is presented as graphs, tables and reports expressed in terms that these users can comprehend and that is in money terms. This information will assist in decision making.
The quantity of information is important but also the quality of the information that must be considered. There is a cost associated with the collection of information and a benefit to be gained from the information thus the term cost benefit analysis. Naturally it is economical when the benefits exceed the costs. Poor quality information can cloud business decisions and out of date information is of no use to anyone.
The accounting system relies on accurate processing of transactions to provide financial data that is converted into reliable and relevant financial information which is used by management to make decisions. There are many groups and individuals who have an interest in the financial reports of a business.
* Employees are concerned about their job security and bonuses.
* Trade Unions are concerned about improving wages and improving working conditions.
* The customers are concerned about the quality of the product.
* The general public may be concerned about environmental issues and overseas ownership.
* Creditors are concerned about whether to extend credit facilities to the business.
* Investors are concerned about how efficiently and profitably the business is operating.
* Government departments such as the Tax Office and the Bureau Of Statistics are interested in information on the business.
In the business world, accounting can provide the information that enables management to plan and then control the activities of the business and then enables the different interested groups to assess the performance of a company and establish accountability to the higher authority for the activities.Therefore the worker is accountable to the management, which in turn is accountable to organizations and the owners who are accountable to the government and the general public.
By: Stephen Reeves
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Stephen has been writing articles for nearly three years. You are welcome to visit his latest websites at Buildings For Sale, School Buildings For Sale and Steel Buildings For Sale.
Ok so you might find the next few links interesting. These are from around the web, just random snippets that I’ve picked up in my reading, but I found some very cool information in them. You might too. Here goes…
What does the irs code 1201 mean? :Tax Lawyer NYC | Tax Lawyer New …
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IRS Possibly Issues $1 Billion Worth Of Bogus Refunds – 24/7 Wall St.
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The IRS plan for return tax preparer registration is scheduled to begin September 2010 and will affect nearly every professional tax preparer in some way. Paid tax preparers must register with the IRS to obtain a Preparer Tax Identification Number, pass an IRS exam and satisfy annual continuing education.
The definition of a professional tax preparer or paid tax preparer is as follows: all individuals, Attorneys, Certified Public Accountants and Enrolled Agents who are compensated for preparing, or assisting in the preparation of, all or substantially all of a federal tax return or claim for refund or who sign, or are required to sign, a federal tax return or claim for refund as a paid tax return preparer. Any individual falling under this category must obtain a Preparer Tax Identification Number (PTIN). All paid tax preparers must obtain a PTIN in order to sign any federal tax returns or forms. The PTIN they obtain will be valid for three years. Testing of these preparers who hold a PTIN will not be implemented until after registration and mandatory PTIN usage are in place. Employees of a business who fill out their employers return will not be required to obtain a PTIN.
All paid tax preparers including Attorneys, Certified Public Accountants and Enrolled Agents who obtain a PTIN will potentially be placed within a national public database. Other information about which paid tax preparers and what information would be included is not yet available.
As of right now, the only paid tax preparers who will not have to pass the new IRS competency exam are Attorneys, Certified Public Accountants and Enrolled Agents. Paid preparers in states such as California, and Oregon who have to pass their own states’ individual criteria must still pass the IRS exam. Credential holders of organizations like the Accredited Council of Accountancy for Taxation (ACAT) will also have to pass IRS competency exams and take the continued competency testing. Across the board, regardless of any private or state accreditation, if you are not an Attorney, Certified Public Accountant or Enrolled Agent you must obtain a PTIN, pass the IRS competency exam, and take continued competency testing in order to be paid to prepare federal tax returns as a registered tax preparer.
Attorneys, Certified Public Accountants and Enrolled Agents who prepare all or substantially all of a federal tax return or claim for refund will also have to obtain a PTIN and pay the fee associated with obtaining a PTIN. However, they are not subject to the new IRS testing or additional educational requirements if they are active and in good standing with their respective licensing agencies.
Looking at this brief outline of a few of the rules and regulations proposed by the IRS, simply becoming an Enrolled Agent will potentially help you avoid 90% of the proposed rules. Of course, it remains to be seen how quickly the IRS can implement these changes or if all the changes they desire will be seen to fruition.
Fast Forward Academy is a leading publisher of study guides and continuing education for enrolled agents and tax professionals. Information on the company including free access to an online question bank for the enrolled agent exam is available on their website.
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