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Bookkeeper, Public Accountant

 

Basic accounting & bookkeeping Principles

accounting & bookkeeping has been defined as, by Professor of accounting & bookkeeping at the University of Michigan William A Paton as having one basic function: "facilitating the administration of economic activity. This function has two closely related phases: 1) measuring and arraying economic data; and 2) communicating the results of this process to interested parties."

As an example, a company's bookkeeper, public accountants periodically measure the profit and loss for a month, a quarter or a fiscal year and publish these results in a statement of profit and loss that's called an income statement. These statements include elements such as accounts receivable (what's owed to the company) and accounts payable (what the company owes). It can also get pretty complicated with subjects like retained earnings and accelerated depreciation. This at the higher levels of accounting & bookkeeping and in the organization.

Much of accounting & bookkeeping though, is also concerned with basic bookkeeping. This is the process that records every transaction; every bill paid, every dime owed, every dollar and cent spent and accumulated.

But the owners of the company, which can be individual owners or millions of shareholders are most concerned with the summaries of these transactions, contained in the financial statement. The financial statement summarizes a company's assets. A value of an asset is what it cost when it was first acquired. The financial statement also records what the sources of the assets were. Some assets are in the form of loans that have to be paid back. Profits are also an asset of the business.

In what's called double-entry bookkeeping, the liabilities are also summarized. Obviously, a company wants to show a higher amount of assets to offset the liabilities and show a profit. The management of these two elements is the essence of accounting & bookkeeping.

There is a system for doing this; not every company or individual can devise their own systems for accounting & bookkeeping; the result would be chaos!

 

accounting & bookkeeping Principles

If everyone involved in the process of accounting & bookkeeping followed their own system, or no system at all, there's be no way to truly tell whether a company was profitable or not. Most companies follow what are called generally accepted accounting & bookkeeping principles, or GAAP, and there are huge tomes in libraries and bookstores devoted to just this one topic. Unless a company states otherwise, anyone reading a financial statement can make the assumption that company has used GAAP.

If GAAP are not the principles used for preparing financial statements, then a business needs to make clear which other form of accounting & bookkeeping they're used and are bound to avoid using titles in its financial statements that could mislead the person examining it.

GAAP are the gold standard for preparing financial statement. Not disclosing that it has used principles other than GAAP makes a company legally liable for any misleading or misunderstood data. These principles have been fine-tuned over decades and have effectively governed accounting & bookkeeping methods and the financial reporting systems of businesses. Different principles have been established for different types of business entities, such for-profit and not-for-profit companies, governments and other enterprises.

GAAP are not cut and dried, however. They're guidelines and as such are often open to interpretation. Estimates have to be made at times, and they require good faith efforts towards accuracy. You've surely heard the phrase "creative accounting & bookkeeping" and this is when a company pushes the envelope a little (or a lot) to make their business look more profitable than it might actually be. This is also called massaging the numbers. This can get out of control and quickly turn into accounting & bookkeeping fraud, which is also called cooking the books. The results of these practices can be devastating and ruin hundreds and thousands of lives, as in the cases of Enron, Rite Aid and others.

 

A Closer Look At accounting & bookkeeping Program.

There was a time when small businesses, specially mom and pop stores could get away without keeping accounts of any sort. In fact, the only reason why they were classified as mom and pop stores were because the business was run in an unplanned manner. But with increasing number of people choose for small businesses and the entrepreneurial plan being foster by governments worldwide, these businesses have to come to represent a large part of the gross domestic produce of countr...

accounting & bookkeeping programs

There was a time when small businesses, specially mom and pop stores could get away without keeping accounts of any sort. In fact, the only reason why they were classified as mom and pop stores were because the business was run in an unplanned manner. But with increasing number of people choose for small businesses and the entrepreneurial plan being foster by governments worldwide, these businesses have to come to represent a large part of the gross domestic produce of countries worldwide. This is where the need for complete accounting & bookkeeping programs surfaced and that is why it has become a big issue for all businesses.

There are various accounting & bookkeeping programs prepared to provide to the needs of all type of businesses. While the smaller stores use separate accounting & bookkeeping programs and smaller, single user license versions of the more popular accounting & bookkeeping programs the larger stores need to use a complete set of accounting & bookkeeping programs. Be that as it may, the fact remains that all businesses, large or small, need to use accounting & bookkeeping programs of some kind in order to make more efficient their process and to comply with governmental regulations.

One of the simplest accounting & bookkeeping programs available in the market today is Microsoft Money. While most computers bought in the United States of America come pre loaded with this accounting & bookkeeping program, it is applicable only for personal finance calculations or maybe small business needs. But as accounting & bookkeeping programs go, it is fairly well designed to cater to the needs of smaller businesses. This explains its popularity in terms of number of users who use it as their primary accounting & bookkeeping program.

A slightly more evolved accounting & bookkeeping program is something that has come to be recognized and sold as Tally. Like the name tells, this is an accounting & bookkeeping program that provide to the needs of smaller businesses, where the accounting & bookkeeping operation is primarily a function that tallies stock (either available or sold) with the cash available in the machines at the counter. That’s not all.

An accounting & bookkeeping program like Tally comes with a customizable order making it scalable for a variety of business operations. Therefore smaller businesses even in the services sector are able to use it to make more efficient their processes.

Today, the wide arrays of accounting & bookkeeping programs available in the market make it easier for businesses not only to organize themselves, but also to obey with local, national and international requirements. Every business thus can adopt and organize the best practices that make globalization helpful to
every one.




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