Background of Accounting and Accountants
Accounting is an integral part of a business. Some entrepreneurs try to do that themselves and others hire an accountant. I am writing this article to show the freelancer the importance of accounting for your business. Considering that a company needs to do this in a disciplined way; if not, you will get the wrong picture of the finances. As your business grows, accounting will become more complicated and, if neglected, put you in big trouble. When you start up, the accounting will record income and expenses for bookkeeping. You might think if you continue to document the sales and purchase invoices will be able to finalize accounts.
Let me look at accounting procedures.
Most people were not interested in accounting as they believed that is for people who were good with numbers. They also think it is a record-keeping and bookkeeping concept, so they initially ignore it. Accounting is much broader than that; it helps determine the business’s financial status. After that, it assesses the industry’s future regarding the company’s financial condition. If the accounting procedures are not appropriately done, the entrepreneur gets confused about the progress of the business and the decision-making process. Suppose the accounting systems implemented the preparation of accounts and financial reports to assess the company’s monetary value. Therefore a business should have proper accounting procedures to stop that from failing.
Who will use the accounting information?
• Individuals ( Self-employed)
• Businesses
• Lenders• Potential buyer
• Charities
• Tax office
• Government Agencies
• Labour unions
The services performed by accountants
There is no limit to the work an accountant can do for a company; the vital factor is maintaining a proper accounting system for the company’s survival.
Private company accountants.
The private accountant excises internal control to ensure all the tasks are completed fully to start the year-end process. They perform management accounting, cost accounting, producing financial reports and recommendations to the management, and helping to make decisions. They create budgets; cash flows and liaise with auditors to approve the accounts for the fiscal year. An accountant will advise the company directors about the changes in the business with the use of a business plan. Then the accountant is responsible for preparing a business plan for the company.
Public sector accountants.
Accountants in the public sector help the public to serve their needs. They are specialists in auditing, tax advice, and management consulting.
Management and Financial Accounting
Small business owners struggle and spend much time with management and financial accounting. Financial accounting helps to find out how the business is doing financially for other people to look at the books. In particular, the potential investors want to know the company’s financial position. Therefore financial accounting summarises the financial position of the company. Management accounting is mainly for internal purposes and helps the management make viable decisions about the company’s future. Management accountants collect information from financial and cost accounting to analyze, which allows for making predictions for better prospects.