ACCOUNTING:
Term accounting use to define
Recording of transactions, Summarizing the business flow, analyze to make
policy based concrete decision and reporting the current and future growth
prospects of company. Here the financial information is served to shareholder
and stake holder in understandable format, i.e., financial transaction,
performance and cash flow.
Accounting standards improve the
reliability of financial statements. The financial statements include the
income statement, the balance sheet, the cash flow statement, and the statement
of retained earnings. The standardized reporting allows all stakeholders and
shareholders to assess the performance of a business. Financial statements need
to be transparent, reliable, and accurate.
We have classification for
accounting"
1.
Financial Accounting
Financial accounting involves the
preparation of accurate financial statements. The focus of financial accounting
is to measure the performance of a business as accurately as possible. While
financial statements are for external use, they may also be for internal
management use to help make decisions. Accounting principles and standards,
such as GAAP (Generally Accepted Accounting Principles) or IFRS (International
Financial Reporting Standards), are standards that are widely adopted in
financial accounting. The accounting
standards are important because they allow all stakeholders and shareholders to
easily understand and interpret the reported financial statements from year to
year.
2.
Managerial Accounting
Managerial accounting analyzes
the information gathered from financial accounting. It refers to the process of
preparing reports about business operations. The reports serve to assist the
management team in making strategic and tactical business decisions.
Managerial accounting is a
process that allows an enterprise to achieve maximum efficiency by reviewing
accounting information, deciding on the best next steps to follow, and then
communicating these next steps to internal business managers.
An example of managerial
accounting is cost accounting. Cost accounting focuses on a detailed break-up
of costs for effective cost control. Managerial accounting is very important in
the decision-making process.
Income statement
Often, the first place an
investor or analyst will look is the income statement. The income statement
shows the performance of the business throughout each period, displaying sales
revenue at the very top. The statement then deducts the cost of goods sold
(COGS) to find gross profit. From there, the gross profit is affected by other
operating expenses and income, depending on the nature of the business, to
reach net income at the bottom – “the bottom line” for the business.
Balance sheet
The balance sheet displays the
company’s assets, liabilities, and shareholders’ equity at a point in time. As
commonly known, assets must equal liabilities plus equity. The asset section
begins with cash and equivalents, which should equal the balance found at the
end of the cash flow statement. The balance sheet then displays the changes in
each major account from period to period. Net income from the income statement
flows into the balance sheet as a change in retained earnings (adjusted for
payment of dividends).
Cash flow
statement
The cash flow statement then
takes net income and adjusts it for any non-cash expenses. Then, using changes
in the balance sheet, usage and receipt of cash is found. The cash flow statement
displays the change in cash per period, as well as the beginning balance and
ending balance of cash.
The Role of
Accountant
The role of an accountant is to
responsibly report and interpret financial records. Small businesses may hire
only one accountant. Large companies may employ an entire accounting
department.
- Accounting
- Billing & Invoicing
- Inventory
- Payroll
- Project Management
- Reporting
- Customer Relationship Management (CRM)
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