Accounting is one of those subjects that seems to attract people with their wide variety of different jobs and rewards. Accounting or bookkeeping is basically the communication, processing, and measurement of non-financial and financial data concerning businesses and corporations. Accounting is also known as accounting is an art and a science that has been developed over many years. In fact, the word ‘accountancy’ was coined in the middle of the thirteenth century by Luca Pacioli, a knight. The term has since been used by various other individuals including businessmen, accountants, landlords and even politicians. But what exactly does accountancy involve?
There are two types of accountants namely financial accountants and chartered accountants. The former works within the confines of an institution while the latter is an independent individual hired by a company for the purpose of maintaining accounting records. It is therefore not uncommon to find accountants working in public offices like banks, mortgage companies, stock brokers, financial institutions, hospitals, law firms, government agencies and even corporations. The responsibilities of each accountant generally vary, though some of them perform the same functions in all kinds of organizations. While every accountant is responsible for preparing financial statements, creating reports and preparing financial analyses, there are certain accountants who are authorized to prepare audits and do some real-time monitoring of the business.
As part of their job, accountants must be able to make financial decisions with regards to resources and assets in order to meet the business goals. This includes making decisions regarding investments, liquidating certain assets, selling certain assets and others. Within this aspect of managerial accounting, there are five main aspects that the accountant should focus on. These include cost analysis, cash flow analysis, asset and liability analysis, credit analysis and internal control. All of these aspects make up the major part of the accountant’s job and they are responsible for formulating plans and forecasting future trends to make sure that the company is able to sustain and grow in a profitable manner.
Cost analysis deals with the allocation of costs of products or services. If an accountant estimates prices of products that have to be purchased, sold or acquired, he/she must also consider the costs incurred for production. The debits and credits refer to revenue loss or gain. Cash flow analysis deals with cash inflows and outflows. Double-entry accounting makes use of information on previous debits and credits in order to forecast the amount of cash that will be generated from future transactions and to know the current rate of profit creation from the business.
Basic accounting refers to the process of gathering financial data which allows an accountant to make informed decisions about the status and the performance of a business. This kind of accounting is widely used by businesses to determine their economic performance. It is a basic part of managerial accounting that enables them to make informed decisions about their economic situation and future prospects. There are many different kinds of accounting methods, each with its own pros and cons. There are two major types of accounting namely single-entry and double-entry accounting.
Single-entry Bookkeeping is a method of keeping financial records by recording only the changes in the value of a commodity with the help of one account. This account records income transactions, purchase and sale transactions, and changes in the balances as well as in the financial statement. Double-entry Bookkeeping is considered the traditional accounting system and is generally accepted accounting principles. It is used to record financial transactions that involve a change in more than one asset or liability. These transactions are generally entered in the cash register, ledger, journal or computerized book keeping system.