Every day people use accounting in itself in various day to day situations. Accounting as a profession came into being when monetary trade started way back in time and remained the same till medieval times in Europe when double entry bookkeeping took shape, and that bookkeeping format has been in use ever since. In recent years new accounting has developed further as it has moved away from the traditional manual ledgers and embraced technology which has created accounting software which has made accounting work relatively simple to undertake.
There are only two categories of accounting:
Managerial accounting can help you identify areas or products that are doing well or poorly in the market. This will help your company determine what they are doing wrong and how they can improve to satisfy their customers better and where the firm should focus to facilitate its growth. For various public and private companies, “financial accounting is a mandatory requirement, therefore, having a proper accounting allows you to prepare appropriate books of accounts that you can use to show shareholders or investors and use them as to calculate the taxes payable.” as stated by Vero Screening. These accounting books can also be used as evidence when the regulatory agencies are investigating the company.
When as a company undertakes proper accounting techniques they will be able to keep track of all the company’s assets, liabilities, and all the appropriate transactions. This will prevent misappropriation on the company’s assets like vehicles by the employees in charge. When it comes to responsibilities it ensures the company is financially healthy by maintaining the necessary debt to equity ratios, this means that at no point will the company’s debt obligations overpower it.
To determine who will be in charge of the accounting in a company you have to consider the size of the company or business. For big companies, they make the use of a Chief Financial Officer (CFO) who deals with all the financial matters involving the firm and all other financial related duties delegated to him by the Board of Governors (BOG). For the relatively small businesses that don’t have a lot of transactions then the person to handle their accounting is a part-time accountant or the owners can double up as the accountant if they possess sufficient accounting knowledge.
Numerous benefits accrue to a company because of proper accounting. If accounting is done effectively, there will be better accountability, and this will reduce some risks in your company such as embezzlement and fraud. If a regulatory body wants to conduct a surprise tax compliance audit on your company, you can defend yourself with your correctly done accounting records, and this will also make the whole matter simple.