Accounting is the systematic method followed in comprehensive preparation of all financial transactions in a business. Also, it can be the process through which financial transaction records are summarized, analysed as well as made into reports to agencies that oversees activities such as auditing in a business as well as the entities required to collect tax. Accounting is very crucial for all business and depending on the size of the organizations, accounts can be handled by accountants and bookkeepers for the small entities and a finance department with a number of employees for large companies. Informed decision can be achieved when the financial reports provided give a true picture of how the business is performing. Individuals that are mandated with accounting activities in a business can do several roles such as bookkeeping and tax preparation.
Financial transactions such as sales, purchases, receipts or payments that have been made to an individual or another organization that take place in a business need to be recorded by the bookkeepers at all times. The bookkeepers records all cash and credit transactions in the respective books such as supplier’s ledger, daybook, customer’s ledger and the general ledger. An accountant is able to come up with reports on the financial situation of the business when the bookkeeper’s record have been done properly. The two common types of bookkeeping records include single-entry and double-entry bookkeeping system. Single-entry bookkeeping uses only expense and income accounts which can be recorded in the journal for expenses and revenue. It is important to have two entries for accounting in order to make records for the transactions and can occur in the liability, asset, expense, equity or the revenue accounts in the double-entry bookkeeping system.
Tax preparation is also a common role carried out in accounting so that the appropriate tax returns can be filed for the business to the responsible body every year. The tax preparers, certified public accountants, attorneys or even enrolled agents can be hired by the business to carry out the tax preparation process. Calculation of the total tax amount and filing the tax are the major activities carried out during tax preparation to ensure that the business complies to the requirements set in the region it operates.
Individuals who are mandated with accounting roles need to have certain qualities to ensure that they carry out quality work. Professionalism and ethics are important and should be followed to the letter to ensure they do not expose financial information to unauthorized persons. Verbal and written communication is essential which ensure that they can provide proper guidelines in all issues pertaining to finances. They also need to have proper customer relations more so those that interact with customers every now and then in the business such as when serving them and addressing issues.