There are several definitions of accounting. Accounting may be defined as (1) a service activity wherein its primary function is to supply quantitative information essentially financial in nature that is all about economic entities which may be significantly useful in decision making for top management. Another definition Accounting may also be defined as (2) the art of recording, classifying and summarizing in a considerable manner and in terms of money, business transactions, activities and events, which are part of a financial character and later on interpreting the results of the reports. Another definition of accounting is (3) the process of identifying, measuring and communication economic information to allow knowledgeable judgments and decisions by all users of the information.
The world of accounting follows certain guidelines and procedures that compose of acceptable accounting practice at a given time. These set of guidelines and procedures are known as GAAP which means generally accepted accounting principles. The basics of accounting principles are as follows.
Adequate Disclosure. This accounting principle states that all relevant information which would affect the understanding and evaluation or assessment of the user of the accounting entity should be disclosed in the financial statements.
Consistency Principle. As the name, consistency, implies, there should be consistence. Firms should use the same accounting method from period to period in order to attain comparability over time within a single enterprise. Nevertheless, companies are allowed to change as long as it is justifiable and be disclosed in the financial statements.
Expense Recognition Principle. In this principle, it is stated that expenses should be recognized in the accounting period wherein goods and services are used up to generate revenue and not when the entity pays for those services and goods.
Historical Cost. This principle states that purchased assets should be recorded at their actual cost and not what management thinks they are worth as at reporting date.
Materiality. It should be noted that financial reporting is only concerned with information that is significant enough that will likely affect assessments and 會計服務公司 decisions. Materiality is dependent on the size and nature of the item judged in the particular situations of its omission. Upon deciding as to whether an item or collection of items is material, the nature as well as the size of the item is assessed together. Either of the nature of the item or the size may be the determining factor, depending on the circumstances.
Objectivity Principle. Records and statements in accounting are based on the most reliable information available in order for them to be as accurate and as useful as possible. Information that is considered reliable may be verified and confirmed by independent observers. It is mainly ideal in accounting that all records are based on information, which flows from activities that are documented by objective evidence. Without the objectivity principle, accounting records may be based on opinions and impulses that may be subject to dispute.
Revenue Recognition Principle. In revenue recognition principle, revenue is to be recognized in the accounting period when services are rendered or performed or when goods have been delivered.
Whether you're a professional, manager at a large corporation or the owner of a small business, maintenance of your accounts is one of the hardest things you will do. Taxes are something you will deal with every year. You will have little choice but to hire an accountant to calculate your tax returns every tax season.
As you have no doubt noticed, the financial markets of today are completely different from how they were only a few years back. Accounting too is no longer the same. Accounting firms have little choice but to keep up with the latest developments in a fast changing world, and the biggest change seen in accounting recently has been cloud accounting.
Not long ago, accountants and CPAs made use of the traditional accounting handbooks to main ledger accounts and balance sheets. Today, with software such as QuickBooks, there's no need to have any handbooks. Paperless accounting is the buzz word today and all the information is on the cloud.
Accountants of today can no longer get away with not having critical computer skills. They should be conversant with basic computing techniques and procedures and should have the confidence and presence of mind to latch on to the latest developments in cloud accounting.
Indeed, if you're an accountant coached in the traditional ways of accounting, who has never adapted to the new developments in the field, then getting a job today would be next to impossible. Good communication is critical too, and it is something that you will need to work hard on.
Accounting firms value communication skills more than anything else. It is not enough to be able to do your calculations well. You will need to be able to explain the various accounting principles to your clients, so that they can feel confident about you and in your ability to solve their problems.
The biggest change seen in accounting relates the online accounting software such as QuickBooks hosting. QuickBooks simplifies a lot of accounting tasks and offers multi-user collaboration, so that members of a team can collaborate and work together on accounting data, depending on their level of authorization.
QuickBooks on the cloud offers other major advantages as well, such as an anytime, anywhere access - which means you will stay connected to your work no matter where you are in the world and regardless of which device you are using. This eliminates the need for an accounting firm or a business to maintain an expensive IT infrastructure for accounting. It also means that accountants can work from home and don't need to be given dedicated workstations.
Certainly, the new changes in technology have been a boon for clients as they eliminate any possibility of human errors in accounting calculations and financial statements. They ensure that the records are flawless and that you don't get into any sort of trouble with the authorities. If you've not switched to QuickBooks hosting as yet, we urge you to do so at the earliest.