Is Your Accounting Or Finance Department Measuring Up Or is it Down For the Count?

Accounting is a methodology by which a company or financial entity measures, discloses, or provides assurance about the financial information of a company that may be used to act as an aid to managers, investors, tax authorities and other decision makers to reach decisions regarding resource allocation. Financial accounting is a branch of accounting that throughout history has required processes to record, classify, summarize as well as interpret and communicate all financial information concerning the business. In other words one can think of accounting as being the "language of business" and accounting forms as the medium upon with that language is communicated.

The heart of accounting is the measurement of financial transactions that are meant to transfer the legal property rights that are performed through contractual relationships. Accounting specifically excludes non-financial transactions because of the need for conservatism as well as principles of materiality. Persons that practice accounting are known as accountants and it is necessary to have a number of different professional bodies that are formed by accountants all across the globe. There are titles given to different accounting personnel such as Chartered Certified Accountants, Chartered Accountants, and Certified Public Accountants.

The use of accountancy methods allows companies to create accurate financial reports and accounting forms that are of great help to managers, regulators, shareholders, creditors and owners. When the day-to-day business transactions are recorded in the books of the company, the method used is known as bookkeeping. The heart of the modern financial accounting system is called the double-entry bookkeeping system.

Double-entry bookkeeping systems require at least two entries for each transaction, one being a debit and, the other a corresponding credit. It is imperative that the sum of all debits exactly equals the sum of all credits and, if it does, then it is a promising sign that the entries have been properly recorded. Such a system first found use in medieval Europe, though some claim that it was practiced much earlier in Ancient Greece.

To get into the profession of accountancy, one would need to attain certain qualifications based on the country in which they intend to practice. An accountant needs to be licensed by a number of organizations, mostly at the state and country level although it is not always a legal necessity for an accountant to be a paying member of any one of the institutions and bodies that are in the business of providing such licenses.

There are different types of accountancy including cost accounting, cash-basis and accrual basis accounting, financial accountancy, fund accounting, internal and external accountancy, management accounting, project accounting, positive accounting, environmental accounting and social responsibility accounting. In addition, accounting principles, rules of conduct and actions can be described with the help of different terms like concepts, conventions, tenets, assumption, axioms and also postulates.

An oft cited criticism of accounting is that it has not changed much and there is need for affecting reforms to keep up with the changing business needs and because of the need to keep accounting relevant to changes in capital assets or production capacity. That is not to say that the basic principles will change; for these should be independent of dynamic economics. Of late, there has been deviation in accounting from economic principles that has ended up with controversial reforms being affected in order to make financial reports more pinpointing of economic realities.

Wade Anderson is a CPA and operates DigitalWorkTools.com Click to view Accounting Forms Article Source: http://EzineArticles.com/?expert=Wade_Anderson

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How You Can Benefit From A Chartered Accountant**

What a chartered accountant does exactly is something of a mystery, which is of course if you’re not an accountant yourself. We know they can assist us with our yearly tax returns, but what else? An accountant is not only experienced to deal with the financial aspects of your business, they often have knowledge of the legal laws in many other areas and you can turn to them for assistance and direction.


Accountants can help out in your private life too. They should be aware of everything going on in your life, such as the arrival of a newborn in the family, as they can then use this information when dealing with your tax issues and areas of investment. If there is a baby born or your daughter is intending to get married it can help your accountant to know. If your accountant is well informed of the financial conditions that surround you, they can put this information to good use by making up strategies that will ultimately save you money present year and for following years to come.

The job of a good accountant is to design a long-term strategy aimed at helping you save money, for example, funds towards your children’s college fees or daughter’s future wedding or for your retirement.

Chartered accountants operate in various business and finance sectors. These can include the private sector, public practice work and government. In Australia they belong to the Institute of Chartered Accountants of Australia and use the elected letters CA, higher-ranking members of the Institute are nominated as Fellows and use the letters FCA.

Here are a few of the tasks you can expect a chartered accountant to perform.

Personal or business income tax returns can be prepared by accountants. Business tax returns for partnerships, trusts, companies, superannuation funds, rental properties and capital gains tax can all be assisted with. They also provide services to assist in legally decreasing tax payments and other related issues. Advice can be given on issues like sale of shares or property, business tax, business acquisitions or disposals and most suitable tax structure for you personally or your business.

Chartered accountants in Sydney and other parts of Australia will deal all the time with the Australian Tax Office (ATO), and be able to advice on Business Activity Statements and Goods & Services Tax.

Financial planning is an important concern for everyone, both for individuals and for businesses. It is about designing a strategy to safeguard you and your family’s future. An accountant will work trough certain areas and then devise a strategy that suit your needs. Financial planning is simply putting together a strategy and plan that will enable you to save towards costs of weddings, buying a house or retirement. Chartered accountants will look at your finances and outgoings and make a plan to suit you. A financial planning service should involve superannuation products for maximising retirement benefits, investments for building wealth together with shares, property, managed funds and fixed interest. Insurance should also be covered as protection from economic loss in the event of death, disablement, accident or illness.

Superannuation is a way to save and invest money whilst you are working for future use, the largest asset of most Australians after their home. Chartered accountants can offer advice on Self Managed Superannuation Funds (SMSF) and whether it is the right choice for you. For accounting services and for registering a new business, you might find chartered accountants very useful.

If you are already established business wise they can give you advice on how to increase profits by applying effective financial plans and systems. Strategic planning, business planning, business valuations, accounting services, payroll services and salary packaging, financial statement preparation and computer accounting software are other areas an accountant deals with.

Accountants today are computer friendly, meaning there is no need to make appointments to go into the accountancy office. Most things can be done online, communication and files the most common. Income tax returns can even be arranged from computerised accounting files, such as MYOB and Quickbooks. Personnel at the agency you decide for should also be informed and knowledgeable on any tax related issues and have the capacity to answer any queries you might have regarding your business or personal account.

Look for a chartered accounting firm offering professional financial planning services. If you are seeking a proficient financial planning service or want help setting up a small business then they can help you realise your goals.

By: ansaar..

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Does Your Business Need an Accountant?

The world's most successful companies have hundreds of accountants and chartered financial analysts working in their accounts departments. Isn't that reason enough why your company needs an accountant too, if not an entire accounts team / department? Well, the answer is no. There's more to it than just following the global business leaders. However, your company needs an accountant, and here's why.

Your business runs with the motive to earn money, and you need to keep the cash flowing in and out to keep your business alive. A lot of transactions happen on a daily basis in your company. An accountant helps keep track of them all, even if the transaction was worth just a cent. Your earnings, savings, expenditure and other monetary transactions, and their details are recorded by an accountant. Hence, in order to know where your business would stand after a year, it's advisable that you hire an accountant today.

While you might say that you're good at accounting and/or have computer software to help manage company accounts, the big question is - is that what you specialize in? If you're reading this page, then chances are high that you're not. You sure know to manage and promote your business and its products / services well, but it becomes very difficult to keep track of all the transactions besides handling other business activities.

An accountant is an expert in dealing with money and recording what a company does with it. With that said, the accountant, or a chartered accountant, sometimes called a Certified Public Accountant (CPA)comes with sufficient knowledge of managing your company's tax structure and liabilities. He will be in a better position to tell you which expenses can lead to more tax savings for the company and its employees; apart from advising you on whom to levy certain commercial taxes on, and in what circumstances.

Also, while making certain big purchases like commercial property or media time and space, an accountant will probably be in the best position to help you setup step-by-step procedures. You might want to pay fairly to your employees, but can your company afford it while it isn't making enough profits? Not sure? Talk to your company's accountant. He will help you fix a viable pay structure.

If your company hasn't hit the break even point in business yet, an accountant, in coordination with a Finance Manager, can assist you in formulating financial time-lines, which will help you forecast (to a great extent) what you would be doing after a year.

If you can't afford an accountant on a full time basis as an employee consider hiring an accounting firm. The firm can provide advice on an hourly basis. The per hour fee will be much higher than what you would pay an employee but you will only have to pay for a specified number of hours. The accounting firm can oversee your accounting system, answer questions, prepare your tax documents, and provide advice.

Interview the accountant or accounting firm so you're comfortable with their experience level and personality. Check references and talk to previous clients. Hiring an accountant or accounting firm is an important step for your business.

Corey Landis contributes articles on business and Internet marketing, and credit card and debt management

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What is a Chartered Accountant and Why Should You Hire One?

For many people, an accountant is something that they feel they only need once a year when they are doing their taxes, if then - but the truth of the matter is that a chartered accountant is an individual who can help you out in a great many financial areas. Whether you are looking on your own behalf as a private citizen, or you are curious about what a chartered accountant can do for you or your business, you'll find that you can consider some of the following pieces of information.

When you are making a comparison between a chartered accountant and a regular accountant, you'll find that there are several important differences. Technically, anyone can call themselves an accountant who regardless of what licensing or education that they have. A person who calls themselves a chartered accountant, on the other hand, is someone who retains a membership in either the Institute of Chartered Accountants in England & Wales, the Institute of Chartered Accountants of Scotland or the Institute of Chartered Accountants in Ireland. These organizations will only allow membership after a series of examinations have been passed and after a certain amount of working experience.

Essentially, when you are working with a chartered accountant, you will find that you are working with someone who has a certain baseline of experience and certification under their belt. When your financial situation is complicated, or if you find that you are in over your head when it comes to financial matters, you'll find that taking on a chartered accountant can help you figure out how to proceed. You may also feel that retaining a chartered accountant will give you a great deal of peace of mind when it comes to the assurance that your financial matters are being handled competently.

When you are looking to retain a chartered accountant, you'll find that the accountants who engage in public practice work will have a practicing certificate which will declare them fit to do so. This means that they have met further requirements and that they have the appropriate professional experience with which to serve you.

When you are looking for someone to look over your financial matters, you'll find that a chartered accountant will most likely be the most competent individual in a place to do so. Take some time and make sure that you look into your accountant's credentials and to make sure that you are confident in their ability to handle your affairs.

Wilkins Kennedy have been offering professional services to business owners across England and worldwide for 126 years and have the expertise and experience necessary whether your business requires accountancy or taxation advice, or the annual audit is due. Search engine optimization by Web Repair Services. Article Source: http://EzineArticles.com/?expert=Monique_Holtman

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Basic Book of Accounting - Journal - Recording Debit and Credit in Accounting

Traders are required to maintain different books for keeping accounts relating to business which are as under:

(I) Journal

(2) Ledger (it shall be explained in another article)

Journal

In order to study the journal, certain related terms along with the procedure of accounting must be studied, which are as follows :

The Account

Transactions involving receipts and payments of cash affect the cash balance. Receipts increase the cash balance and payments decrease the cash balance. Instead of increasing or decreasing the balance after every transaction we may put all increases together in one column and all decreases together in another column and find the balance only when required. It will be much convenient and time saving.

In accounting, the device called an account is used for this purpose. The simple form of account is called a T account is shown below. Increases of cash have been listed on the left hand side and the decreases on the right hand side, the closing balance has been ascertained by deducting the total payments from the total of the left-hand side.

Debit and Credit in Accounting

As is clear from the form of account given above it is divided in two parts: Left-hand side is known as 'debit side' and right hand side is known as 'credit side'.

Amounts entered on the debit side (left hand side) are called debits and amounts on the credit side right-hand side) are called credits. 'To debit' means to make an entity in the left-hand side of an account' and 'To credit' means to make an entry in the right-hand side of an account.

The words debit and credit have no other meaning in accounting.

Abbreviation used for debit is Dr. and for credit Cr.

Rules of Debit and Credit (Equation Based)

Dual aspect concept in accounting implies that every accounting transaction would be expressed by a debit amount and an equal and opposite credit amount. Thus, the rule that for each transaction debit amount must equal the credit amount has absolutely no exception. The equality of debits and credits may be expressed in the form of an equation:

Debit = Credit

In the previous article we discussed accounting equation:

A-L = P

i.e., Assets-Liabilities = Proprietor's Funds or Capital

If each account was to be considered in isolation it would make no difference whether increases were recorded on the debit side or on the credit side but since the accounts are inter-dependent therefore a system of recording increases and decreases on the two sides had to be fixed. Traditionally or conventionally increases in asset accounts are recorded on the debit side while increases in liabilities and capital are recorded on the credit side. The above rule ensures that when account balances are totaled will confirm to the accounting equation discussed above.

It gives rise to the following rules: .

1. Increases in asset accounts are debits, decreases are credits.

2. Increases in liability accounts are credits, decreases are debits.

3. Increases in Owner's equity accounts are credits, decreases are debits.

Total classes of accounts maintained by any business will include the accounts relating to expenses, losses, revenues and profits in addition to assets, liabilities and proprietor's funds. Rules of debit and credit regarding assets, liabilities and capital have been stated above and the rules for expenses / losses and revenues/ profits can be derived from the same.

4. Increases in expenses/ losses accounts are debits.

Since the expenses and losses when incurred and suffered lead to reduction in the capital and ecreases in owner's equity accounts are debits, therefore increases in expenses and losses accounts are Debits.

5. Increases in revenues/ profit accounts are credits.

Since the revenues and profits when earned will lead to increase in the capital and increase in owner's equity accounts are credits, therefore increases in revenue and profits accounts are credits.

The rules of debit and credit discussed above are based on accounting equation technique. Traditional rules of debit and credit are based on classification of accounts. These rules in practice give the same
results and operate in the same manner. These merely stale the position in a different way.

The author is an engineering graduate, B.E.(Hons), and is managing his own software development firm, HiTech Computer Services, that mainly deals in accounting, billing and inventory control software for traders, industries, business houses, hotels, hospitals, medical stores, newspapers, magazines, petrol pumps, automobile dealers, commodity brokers and other business segments, website and web application deveopment for business. The software are available both for intranet and internet. These software are available for download from the website: Evaluation version download is available at http://www.hitech-on-web.com/p10.asp Copy of the article and full Financial Accounting Primer or Tutorial is available at http://www.hitech-on-web.com/Basic_Book_of_Accounting_Journal.asp Visit HiTech Computer Services at http://www.hitech-on-web.com/ Article Source: http://EzineArticles.com/?expert=Anil_Kumar_Gupta Find More : Book Accounting , Keeping Book , Services Accounting , accounting transaction , accounting equation

Accounting - A Practical Definition

What is accounting?

A simple definition is the recording of financial or money transactions. Not all transactions need to be recorded. Mostly, only business transactions are recorded, personal transactions are rarely recorded by individuals.

For example, you purchase a book for $10. You give the book seller $10; you receive the book & a receipt for $10. More often than not you throw the receipt away; you only want to read the book. The book seller however is operating a business so the transaction will be recorded.

The book seller will record the $10 as a cash sale and at the end of the day will total all of the book cash sales. That is easy, count the money in the till less the float amount at the start of the day and you have the total sales for the day. The book seller now has a problem, how many books were sold, what books were sold and was there a profit for the day?

Does it matter? It does if the book seller wishes to continue the business. This is where the accounting system or process begins to be a little more complicated.

The book seller now has to figure out a few things. How many books were sold is relatively easy, 45 transactions for the day so 45 books sold today. All at $10, unlikely, so the book seller needs an accounting system to record or show this information. This accounting system should show what books were sold, at what price and how many were sold.

The book seller needs this information because tomorrow there will be more sales. If there were 10 books titled "Book 1" today and four were sold then tomorrow there will only be six on the shelf. If four more are sold tomorrow, there will be two left for the day after tomorrow. If customers come into the book shop to buy "Book 1" and it is not available they will go somewhere else to get it.

It may take a week to receive more books after an order is made.

So the accounting system must show the book seller when more books need to be ordered not just how many were sold and at what price. In the example "Book 1" the book seller will need more books arriving tomorrow or early the day after so no book sale is lost. The new book order would have needed to be made a week ago for there to be no loss of book sales.

How much did the book seller pay for the books? That information also needs to be available to show whether a profit is being made. The simple transaction of one $10 sale is not so simple for the book seller.

Accounting is far more than the simple recording of a financial transaction. Accounting needs to be able to provide more information than the financial amount of the transaction alone.

A better definition would be accounting is the process of recording all aspects of the money transaction from a financial, physical and non-financial informational point.

Mind you not all transactions are completely money so even the better definition is not complete when it comes to a definition of accounting. Accounting involves so many different areas of business that any definition given is always going to be open to debate, especially amongst accountants.

Michael Russell Your Independent guide to Accounting Article Source: http://EzineArticles.com/?expert=Michael_Russell

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