Accounting is one of the most important concepts to a company. There are three major parts to accounting and they are Auditing, Analysis, and Reporting. Accounting is the process by which the accountant measure, discloses or provides assurance about the financial condition of a business or organization. The word “accountancy” comes from the Latin phrase “ad litteram”, which means “things written”. The first part of the word is usually referred to the preparation of financial reports. The other two parts refer to the assessment of the performance of a company’s business or organization.
It is very important to have an accountant for the purpose of maintaining records. The accounting process creates financial accounting information that can be used to make strategic decisions. Strategic decisions such as those regarding investment, financing, expansion, mergers, acquisitions, and disposal of certain assets are made using financial accounting information. In order for a manager to understand and evaluate the effectiveness of his business, he must have access to correct, up-to-date information regarding the financial condition and assets of the business. All of this financial information must be reported in a timely manner to allow managers and owners to make informed business decisions.
In general, all transactions in a business are recorded in a journal called the invoices and receipts account. Major areas of accounting include: general ledger, journal account, and statement of earnings. All of these areas of accounting report the financial aspects of the business decisions that were made during the day, including the effects of: direct and indirect expenses, income and expenses from sales and purchases, inventory, liabilities, and equity.
Generally, the accounting profession is divided into two major categories: managerial and business accounting. Managerial accounting focuses on the management of people and the day-to-day operations of an organization. Business accounting focuses on financial transactions and reporting the results of those transactions to the management. Most accounting standards are based on the information gathered during the two types of accounting.
All managerial accountants must work under the supervision of a manager or supervisor who is responsible for the overall organization’s accounting activities. The major components that make up a managerial accounting system are: financial documents, internal control systems, and accounting policies. Some of the documents included in a managerial accountant’s office are: financial reports, journal, and instructions to managers. All of these documents serve a number of purposes, which include: cost accounting, cash flow analysis, budgeting and financing, project accounting, insurance ledgers, and clientele/consultant follow ups.
Cash flow is one of the most important aspects of managerial accounting, because it is used to track and explain a business’s financial records. Cash flow is created by properly recording expenses, receipts, and payments. With this type of accounting, it is necessary to accurately record expenses, take the time to account for them, and record payments. Cash flow analysis is extremely important when it comes to financial accounting, because the proper recording and interpretation of cash flow can provide managers with an accurate picture of their company’s expenses and cash flow.