The Beginner’s Guide to Businesses

Informed Decision-making through Proper Financial Records

The comprehensive preparation of records for all financial transactions in a systematic way in a business is known as accounting. It can also be described as making summaries of the financial transaction reports, analysing them and making reports on all these transaction to agencies that oversees activities such as auditing in a business as well as the entities required to collect tax. Accounting is very crucial for all business and depending on the size of the organizations, accounts can be handled by accountants and bookkeepers for the small entities and a finance department with a number of employees for large companies. Informed decision can be achieved when the financial reports provided give a true picture of how the business is performing. Bookkeeping and tax preparation are some of the roles carried out by those individuals who engage in accounting in a business.

Bookkeeping involves recording all transactions in a business such as sales, purchases, receipts or payments that have been made to an individual or another organization. There are various record books where a bookkeeper is required to record both the cash and credit transactions which includes the supplier’s ledger, daybook, customer’s ledger and the general ledger. It is through these financial records that an accountant is able to come up with reports on the financial situation of the business. There are two common entry systems in bookkeeping which includes single-entry and double-entry bookkeeping system. Single-entry bookkeeping uses only expense and income accounts which can be recorded in the journal for expenses and revenue. It is important to have two entries for accounting in order to make records for the transactions and can occur in the liability, asset, expense, equity or the revenue accounts in the double-entry bookkeeping system.

Another duty in accounting is tax preparation where appropriate tax returns can be filed for the business to the responsible body every year. Other that the people involved with accounting doing the tax preparation, the business can also look for a suitable tax preparer, certified public accountants, attorneys or even enrolled agents at a fee. Tax preparation through processes such as calculation of the total tax amount and filing the tax is crucial for a business which ensures that it is compliant to the laws of the region it operates.

There are certain qualities that show an individual can work well in the accounting section in a business. The individuals need to be professional and ethical in everything they do so that they are able to keep financial matters away from unauthorized persons. Accountants need to have a proper communication ability both in written form and verbal to ensure that they have a clear understanding of all issues in pertaining to finances in the business. It is also important that they relate well with the customers when serving them and also addressing issues.

Short Course on Businesses – What You Need To Know

Short Course on Businesses – What You Need To Know

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