Learn More About Accounting

Every business knows that accounting is very important as it allows directors; investors and stakeholders make informed decisions. Businesses have been keeping books of accounts from time immemorial. Therefore, it is safe to say that accountancy is one of the oldest professions.
It should be noted that accountancy is different from bookkeeping, though most people have a tendency of using the two terms interchangeably. Generally, bookkeepers are responsible for keeping track of all the business financial records. A bookkeeper is required to record money received by the business and the expenses incurred by the business. Their work is quite simple compared to that of accountants.
Accountancy encompasses a lot of areas. Gone are the days when it was considered as a job that involves keeping records. The scope of accountancy has expanded significantly as many things have been added to it such as compliance, comprehensive analysis and so forth. But before going further, it is essential to understand what accountancy is. In basic terms,accountancy can be defined as both an art and science. This is because it the process of collecting, recording, analyzing and compiling financial information in a systematic manner. The accountant recording the fiscal details will be required to it with utmost honesty. There are many different reasons why businesses are required to have these financial statements prepared.
The main purpose of accountancy is to maintain essential fiscal records for future use. This information helps individuals determine the expenditures and gains that have taken place within an organization. Such records can also be used as an evidence that certain transactions took place at a given date and time. The company can also use the information to determine their strength and weakness. For instance, if the company is making losses they can easily know where the problem is.
There are two different types of accounts – personal accounts and double entry accounts.Personal accounts are generally easy to keep and most people can do it. However, this might not be the case when it comes to double-entry system accounts, because it is a bit complex and difficult. It calls for the expertise of a qualified accountant. The law requires all businesses to keep track of their financial records. The government mayneed that report to evaluate the business. For example, they may want to determine whether a business have ever been involved in fraud or professional malpractices.
There are many different areas in the field of accountancy. For example, tax accountants, financial advisors, auditors and so forth. Generally, accountants in Melbourne are expected to adhere to universal principles while doing their work, such as the International Reporting Standards(IFRS) and the Generally Accepted Accounting Principles (GAAP).
Some of the financial statements prepared by accountants include: Profit and Loss Statement,Statement of Retained Earnings, Statement of Cash Flows and Balance Sheet. A balance sheet is arguably the most important financial statement of a business or organization. It is normally prepared to show the liabilities, owner’s equity and assets. Such information can help the business make informed financial decisions.


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