Accounting or accountancy is a method of measurement, interpretation, and reporting of financial and other non material financial information about organizations including corporations and businesses. Accounting involves the collection, interpretation, and preparation of financial records. It includes taxation, investments, monitoring, and reporting of the financial performance of an organization. This includes valuing the assets of the organization and the liabilities of the owners, the recognition of gains and losses, the preparation of reports and documents in connection with the activities of the organization, the recording of insurance claims, the preparation of accounting reports and balance sheets, and the preparation of reports for management. Auditors also help businesses with auditing matters.
There are many types of accounting and each has its own set of principles, requirements, and scope. Some of the most common types of accounting include the basic accounting system that includes the manual recording of daily financial transactions, the general ledger, the journal account, and the statement of cash flows. All of these accounts are required to be maintained by individuals or corporations during a particular time period and must meet certain requirements. Businesses may use one or more accounting systems.
In order to understand how all three types of accounting work, it is helpful to have a basic understanding of how an accountant makes his/her money. Accountants receive their fees from companies that are reporting financial information to them. The fees that accountants receive are in direct proportion to the amount of money that was spent to conduct business. The main benefit of having accountants is that they provide bookkeepers with services that are necessary to perform their job.
A bookkeeper is responsible for maintaining financial records for an organization. The purpose of the books is to maintain accurate records of the flow of money within the organization and to track the financial position of the business every day. An accountant provides the needed service of ensuring that the books are accurate and reports are properly prepared and audited on a timely basis.
Bookkeepers and accountants provide other services as well. They can create reports for management and analysis. They can prepare tax reports, issue statements related to business transactions, and help with mergers and acquisitions. When dealing with cash flow analysis, the accountant checks the accuracy of the information provided by the bookkeeper. When it comes to preparing financial statements, the accountant verifies that the financial statements reflect the accurate cash flows and accounts receivable, inventory, and payroll items that are recorded in the bookkeeping records.
The accountant provides managerial and administrative support to the owner, manager, or owner representative of the company. In essence, the accountant provides funds management services. When an owner, manager, or director requires specialized accounting services, the services will be provided by a member of the firm that performs accounting.