The classification of financial data, its presentation and recording is what makes up accounting. It also includes the flow of money and value within a given society. Accounting also refers to a process of receiving accounting items as well as their recording. The aim is to establish standard accounting documents. It is a discipline that forms the basis of management tools. The data obtained is then expressed in quantity and in the form of numbers or monetary value. A leader who wants to manage the finances of his own business should understand these few basics.
Two very distinct accounts
For a business, there are two types of accounting. The first is general accounting which is intended for actors outside the company. Then there is cost accounting which is more intended for internal analysis.
You should know that general accounting is mandatory which is not the case with cost accounting. However, it’s best to be able to keep an eye on both of these facets of a business’s finances. Of course, cost accounting allows a company to analyze its profitability in addition to knowing its costs. Thus, these are two accounts that complement each other.
Know the advantages and objectives of accounting
As the manager of a business in Ixelles, you must understand that keeping the accounts in Saint-Gilles allows you to know and analyze the situation of the business in real time. Moreover, it is a means used in decision making. What is more, it helps to justify the decisions that have been taken. Accounting helps keep track of the cash in the cash register. This relates in particular to inputs, outputs and the amounts available. It is still a tool used in the context of the inventory of the company’s assets, then relating to financing and various assets.
As part of the management of the accounts, the manager of the company will have to keep various documents including the balance sheet and the income statement. The latter relates to the profits and losses of the company over a period. The balance sheet shows what the company owns. To this is added the table of uses and resources as well as the annexes.
Understand the characteristics of accounting
The Ixelles accounts must already be precise, honest and reliable. Thus, it is necessary that the recordings are made without error. At the time of the recording in question, it is necessary to respect the procedures and the rules. This is valid for all operations including the presentation of accounting documents.
In addition, accounting makes it possible to compare financial and economic data between organizations. The comparison is made in time, in space and in an objective way. For small structures, they can make use of accounting software or they can outsource accounting by recruiting an accountant. The latter is subject to certain standards and ethics. Accounting provides various information that can be useful to many actors including investors, banks or customers.
To ensure the veracity of the accounts as well as their accuracy, it is possible to have the audit done by an auditor. Note otherwise that two systems allow the accounting entries to be recorded as they should. So, on the one hand, there is double-entry bookkeeping which records transactions on two accounts. Then there is single-entry accounting which records a transaction on a single account. The latter accounting is less used, but it is the one that calculates the balance between income and expenditure. The balance will then be entered.
There is then a first column which is used for the description of the operation while the second indicates the amount in figures, whether negative or positive. For double-entry accounting, the transaction is transcribed on both credit and debit side.