ACCOUNTING

DEFINITION

The systematic and comprehensive recording of financial transactions is related to a business. Accounting also refers to the process of summarizing, analyzing and reporting these transactions. The financial statements summarize a large company’s operations, financial position and cash in a particular period.

Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with employers at larger companies.

Accounting is a system of recording information about a business. This is collected as primarily numerical and it is presented to many people to help them to make decisions. The accounting system is used to maintain records for all businesses, whether a multinational corporation or a small business.

To account for something means to keep a record of something in your business by using the accounting system.

An account (or bookkeeper) collects documentation and records this information, categorizes and presents it in specific formats. Accounting information is finally presented in the form of financial statements and the key reports of a business.

Bookkeepers are usually involved more in data and entry. Accountants can fulfill this role too, but more often these days are involved in preparing financial statements. Accountants have even become business strategists and they are involved in the operations of a business.

 

 

Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature and it is intended to be useful in making economic decisions.

 

WHY IS ACCOUNTING SO IMPORTANT?

An important part of a business or organization is the money that comes in and the money that goes out. The accounting department typically monitors transactions and dealing with taxes. Overall, the accounting department can determine the health and efficiency of a business, and increase when people study this information.

The accounting department exists to ensure that a business isn’t losing unnecessary money and employers are being paid.

We need accounting because it’s the only way for business to grow. Accounting is the backbone if the business financial world. After all, accounting was created in response to the development of trade and commerce.

 

BASIC CATEGORIES OF ACCOUNTING

FINANCIAL ACCOUNTING

Financial accounting is comprised of information that companies make available to the general public: stockholders, creditors, customers, suppliers, and regulatory commission.

 

 

MANAGERIAL ACCOUNTING

Managerial accounting deals with information that is not made public. Information such as salary costs, cost of goods, profit targets and material control information

The knowledge is supplied by managerial accounting for the use of department heads, division managers and supervisors to help them make better decisions about the day-to-day operations of the business.

WHY DO WE NEED ACCOUNTING?

A business is just like a fish out of water without accounting. Accounting is important for a business as capital. It can be referred as the language of business. It is much like all other systems in place, they are only as goods as the people using them.

 

ROLES OF A PROFESSIONAL ACCOUNSTANTS IN BUSINESS

A competitive professional accountant in business is an invaluable asset to the company. We employ an inquiring mind to our work that is founded on the basis of our knowledge of the company’s financials.

Accountants use their skills and intimate the understanding of the company and the environment in which it operates. Professional accountants in business ask themselves challenging questions.

Accountancy professionals in business assist have some put in practice some skills for the company:

• Provide advice and help businesses to reduce costs.

• Mitigate risks

 

Professional accountants in business represent the interest of the owners of the company.

 

Their roles ordinarily include:

• Governance the organization.

Such as approving annual budgets and accounting to the stakeholders for the company’s performance.

 

• Determine management’s compensation.

 

• Provide independent assurance to manage the organization.

 

• Governance and internal control processes to operate effectively.

Finally, professional accountants in business are stars in organizations to create a valuable growth. They are also the front runners in companies. Public expectations about them are high.