Accounting & Bookkeeping Services
What Is Accounting ?
Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing, and reporting these transactions to oversight agencies, regulators, and tax collection entities. The financial statements used in accounting are a concise summary of financial transactions over an accounting period, summarizing a company's operations, financial position, and cash flows.
KEY TAKEAWAYS
Regardless of the size of a business, accounting is a necessary function for decision making, cost planning, and measurement of economic performance.
A bookkeeper can handle basic accounting needs, but a Certified Public Accountant (CPA) / Chartered Accountant (CA) should be utilized for larger or more advanced accounting tasks.
Two important types of accounting for businesses are
Managerial accounting.
Managerial accounting helps management teams make business decisions
Cost accounting.
Cost accounting helps business owners decide how much a product should cost.
Professional accountants follow a set of standards known as the Generally Accepted Accounting Principles (GAAP) when preparing financial statements.
Income statement (Profit & Loss Account / Income and Expenditure Account). Arguably the most important.
Balance sheet.
Cash flow statement.
Note to Financial Statements.
Statement of change in equity. (Owner's / Partner's / Shareholder's Fund)
Accounting is an important function of strategic planning, external compliance, fundraising, and operations management.
Regular Recording of
Purchase / Sales (Purchase return / Sales return)
Bank / Loan Account Transactions
All Other Business Expenses like EB, Rent, Salary, etc.,
Cash Vouchers
Track Periodical
Business Profit / Trend.
Trade Receivables / Trade Payables (Debtors / Creditors)
Salary paid and other Employee benefit payments.
GST Payable / Carriedforwards.
Loan Account repayments and Pendings.
Payments to Partners / Shareholders as loan / Share of Profit
Benefits of Business Accounting
Maintenance of business records
It records all the financial transaction pertaining to the respective year systematically in the books of accounts. It is not possible for management to remember each and every transaction for a long time due to their size and complexities.
Preparation of financial statements
Financial statements like Trading and profit and loss account, Balance Sheet can be prepared easily if there is a proper recording of transactions. Proper recording of all the financial transactions is very important for the preparation of financial statements of the entity.
Comparison of results
It facilitates the comparison of the financial results of one year with another year easily. Also, the management can analyze the systematic recording of all the financial transactions according to the policies of the entity.
Decision making
Decision making becomes easier for management if there is a proper recording of financial transactions. Accounting information enables management to plan its future activities, make budgets and coordination of various activities in various departments.
Evidence in legal matters
The proper and systematic records of the financial transactions act as evidence in the court of law.
Provides information to related parties
It makes the financial information of the organization available to stakeholders like owners, creditors, employees, customers, government etc. easily.
Helps in taxation matters
Various tax authorities like income tax, indirect taxes depends on the accounts maintained by the management for settlement of taxation matters.
Valuation of business
For proper valuation of an entity’s business accounting information can be utilized. Thus, it helps in measuring the value of the entity by using the accounting information in the case of sale of the entity.
Replacement of memory
Proper recording of accounting transactions replaces the need to remember transactions.