A Quick Overlook of Businesses – Your Cheatsheet

Role of Accounting in Business

Accounting is described as a comprehensive preparation of records of all financial transactions in a systematic way in a business. Also, it can be the process through which financial transaction records are summarized, analysed as well as made into reports to agencies that oversees activities such as auditing in a business as well as the entities required to collect tax. Each business is required to have an accounting segment which varies depending on the size of the organization where accounts can be handled by accountants and bookkeepers for the small entities and a finance department with a number of employees for large companies. Accounting ensures that the businesses are able to come up with informed decisions through the financial reports they are presented with. Bookkeeping and tax preparation are some of the roles carried out by those individuals who engage in accounting in a business.

In bookkeeping, the bookkeepers are required to record transactions that take place in the business such as sales, purchases, receipts or payments that have been made to an individual or another organization. The bookkeepers records all cash and credit transactions in the respective books such as 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. Single-entry and double-entry bookkeeping system are the two common entry systems in bookkeeping. In the single-entry bookkeeping method, only expense and income accounts 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.

Appropriate tax returns can be filed for the business to the responsible body every year in the process known as tax preparation which is a role in the accounting field. Other people who can do the tax preparation includes tax preparer, certified public accountants, attorneys or even enrolled agents at a fee. Calculation of the total tax amount and filing the tax are the major activities carried out during tax preparation to ensure that the business complies to the requirements set in 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.

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