In many cases, accounting professionals must sometimes choose between two or more acceptable methods of accounting for business transactions and events. In selecting the most appropriate method, an accounting professional must weigh out the different methods of transactions in order to avoid matters involving ethical concern.
The most appropriate accounting method is called the double entry bookkeeping system. This system was first used in medieval Europe and, even possibly, all the way back to ancient Greece. The system involves making two entries for every transaction, a debit in one account and a credit in the other (Wikipedia, 2006). However, even within this method are choices. For example, an accountant can chose to round all transactions to two decimal places. Yet, when rounding occurs, books may not be the most appropriately balanced and some money may not be accounted for, or there may be a surplus.
Many business owners set budgets based on accounting findings. These budgets can affect all aspects of the business operations and can determine the path for business success or failure. Prices charged to consumers are often determined based on budgeting needs as the business owner seeks to maximize profit margins. If the accountant fails to select an appropriate accounting method, the budget will be affected, as will the customer.
In selecting the most appropriate method of accounting, it is important to take into account methods of ethical concern. A business that follows sound ethical principles will gain and retain the trust of the customers. As a result of this, accounting professionals must adhere to all ethical codes and guidelines in making accounting decisions. That is, accounting professionals must consider the sensitivity of the duties they are empowered to perform and always using the best moral judgment when selecting the most appropriate accounting method to use.
Wikipedia (2006). Accounting. Retrieved December 20, 2006 from www.wikipedia.org