The comprehensive preparation of records for all financial transactions in a systematic way in a business is known as accounting. It can also be described as making summaries of the financial transaction reports, analysing them and making reports on all these transaction 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. Bookkeeping and tax preparation are some of the roles carried out by those individuals who engage in accounting in a business.
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. There are various record books where a bookkeeper is required to record both the cash and credit transactions which includes the 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. There are two common entry systems in bookkeeping which includes 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. In the double-entry bookkeeping system, two entries for accounting are required to make records for the transactions and can occur in the liability, asset, expense, equity or the revenue accounts.
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. Tax preparation through processes such as calculation of the total tax amount and filing the tax is crucial for a business which ensures that it is compliant to the laws of the region it operates.
Accounting persons need to possess certain qualities that indicate they are suitable to carry out their duties well. Since financial information in a business is very important, it needs not to be exposed to unauthorized persons hence the people need to be professional and ethical. They should also have proper communication skills both written and verbal to ensure that they are clear and understand everything in the field. It is also important that they relate well with the customers when serving them and also addressing issues.