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If you’ve been struggling to get your head around the concepts of accounting, this is the blog post for you! We'll be going through a step by step guide on how to think about accounting from a logical, systematic point of view. The problems with traditional subjective approaches will be demonstrated and some alternative approaches will be discussed. As you may know, accounting is not the “fun” part of business. Accountants are often seen as boring people who like spreadsheets and numbers, and who don’t care much about what’s really happening in the company. This stereotype is usually wrong for two reasons. First because accountants do care about what’s happening in the company, but because their job is to provide financial information to stakeholders it’s an objective view. Second because accountants are definitely not boring! I personally love numbers, but I absolutely hate spreadsheets (I would rather be climbing up a mountain than adding up numbers). Furthermore, there are many different sectors in accounting (audit, tax services etc. ); each one requires a different approach for delivering good financial information. The goal of this blog post is to show how accounting can be approached from a logical, systematic point of view.I’m going to assume that you already have the relevant knowledge, so let’s begin by defining the subject at hand. Accounting is usually defined as the process used to provide financial information for decision making. However, there are many other ways in which accounting could be used in business after this definition. Some examples are:

Accounting is an objective discipline which provides information for decision making at different levels of management (i.e., at the firm level, department level etc. ). So in order to obtain the best decisions, it’s important to obtain financial information at different levels of management. This information can be used for different purposes but in the end it is always aimed at answering some questions. The ones that will be analyzed here are:

The difference between these questions is that enquiry 1 and 2 are part of the strategic management, while enquiry 3 belongs to the tactical management level. The general idea here is that if we use accounting as a source of information it must provide this type of information; otherwise we would be missing an important dimension and therefore we wouldn't get any meaningful financial statements. Now that we know what we want and what we do not, let's see how we can obtain this information. We will start by defining the “financial reporting” process and then we will discuss each step in detail.The issue is that we don't care about the numbers as such (i.e., the numbers depend on the business context), but rather about their meaning (i.e., they must be easy for stakeholders to understand).

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