Accountants are stereotyped as robotic. Working with numbers day in and day out gives outsiders the impression of impersonality; stuck in a profession where the acquired trades lack any overlap into real life situations. But a clear grasp of accounting concepts does, in fact, have real life application. Understanding risk, cost-benefit, and money management in turn play a larger part in your life choices and personality.
So how do accounting concepts apply to real life? Here's how.
Prudence
Under the prudence accounting concept, organizations need to exercise professional judgement to avoid over or understating their assets and liabilities. Here, moderation takes precedence. Being overly cautious or too enthusiastic about specific data leads could provide inaccurate projections.
On a personal scale, this concept manifests itself in the conservative nature of the accountant's personality. They play their cards straight; never over reacting or understating the gravity of a situation. They all know what devastating effects hyperbolic assumptions have on the reality of a situation. In this regard, accountants find themselves acting under moderation.
Neutrality
The neutrality accounting concept implies that the information contained in any financial report is wiped clean from any bias. Biases occur when management tries to hide any liabilities to minimize the gravity of a company's financial situation.
Accountants tend to be very straightforward: no sugar coating, no white lies. They seek the cold, hard facts of any given situation and present them warts and all. Following the principle of neutrality, accountants lend themselves to the voice of reason. Logos over Pathos. When life throws them a curve ball, accountants react with conditioned logic. It's a great trait to have, and often the foundation of successful business owners.
Timeliness
The timeliness accounting principle requires that financial information be disseminated to the appropriate people within a given time-frame in order to inform business decisions. Closely related to relevancy accounting, turning information in too late renders it irrelevant to decision makers.
Nobody appreciates tardiness. Which is why everybody appreciates an accountant. Because of the daily pressure for on-time and accurate data, accountants rarely second guess themselves, deviate from the status quo, or arrive tardy or unprepared. These traits once again make for a great accomplice and valuable business associate.
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