Can a Business Get Going Without an Accountant Service?

Businesses can rarely make it without using an accountant service. Most of the time, entrepreneurs centre their efforts on running the many activities that give life to the companies they own. This is the logic behind why there is a need for someone who has the capability to analyse the flow of financial transactions.

The platform for marketing products and services can be full of uncertainties. There is no one formula that businesspeople can apply to assure them that what they are selling will get a warm welcome both from local and international customers.

Having an efficient accountant service through the experience and skills of an established professional should be one of the factors that entrepreneurs should put on their list of priorities. While mistakes sometimes happen, it is only wise to make some critical preparations to avert the possibility of a financial disaster from happening.

A competent professional or company that provides an accountant service takes the needs of the business seriously by keeping track of the whole scheme of things. There is only one reason why the finances of a business has to be taken care of, and that is for owners to know if it is still feasible to continue operations, integrate changes to enhance profitability, or time to close shop.

The most prudent move that owners should do before hiring a company or a professional expert is to ask for a rundown of the services they offer. Knowing the responsibilities of an accountant ensures that it is going to be a partnership of professionalism and trust.

Accountant service and coverage include:

• Bookkeeping, report preparation and analysis, regular communication with owners regarding the status of the business and related matters

• Establishing and managing the credit standing of the company

• Preparation of tax reports monthly or annually, payment of tax dues and address discrepancies when they occur

• Maintaining books of accounts, updating financial information regularly through special programs installed in the company's system

The entry of the worldwide web in the big picture has literally changed the business scenario into a fast-moving play of skill and acumen. Therefore there is no way that company owners should leave everything to chance. They should always use an accountant service that provides full support in all aspects to ensure that success can be achieved.

Outsourcing the need for an accountant service to independent companies or professional freelancers who have proven their worth in the field is a cost-effective approach that owners should and must consider. A business can be assured of making its mark in the community of entrepreneurs through the cooperative efforts of the owner, the accountant and the whole workforce.

When a competent professional freelancer provides an accountant service specifically designed for a particular company, losses can be minimized for as long as the owner has the commitment to see through the ups and downs. Suffice to say; even the rules of business engagement can be changed to conform to an environment that encounters the greatest of challenges when they come along.

By Amitaabh Saboo----->Article Source: http://EzineArticles.com/7914020

Accounting Financial Statements - The Statement of Cash Flows

A statement of cash flows, or cash flow statement in financial accounting is a financial statement that illustrates how variations in income and balance sheet accounts affect cash equivalents and cash. The analysis is broken down to investing, operating, and financing activities. In essence, the cash flow statement is primarily concerned with the flow of money both in and out of the business. The statement portrays the accompanying changes in the balance sheet as well as the current operating results. As a tool for analysis, the cash flow statement has been proven useful in its ability to determine the short-term viability of a particular company, especially its capability to pay bills.

International Accounting Standard 7 is the international accounting standard that deals specifically with cash flow statements. The list of groups and people who take interest in cash flow statements consists of accounting staff, whose job it is to be aware of whether the business will be able to cover its expenses, both potential lenders and creditors, who want solid evidence of a business's capability to repay loans, potential investors, who need evidence of a company's financial stability, potential employees, who need verification that their salaries will be paid, finally, shareholders of the business.

The cash flow statement was initially referred to as the flow of cash statement. The statement is a depiction of a business's liquidity. The balance sheet is a small illustration of a business's financial stability and liabilities at any given point in time, and the income statement provides a summary of a business's monetary transactions over a duration of time. The two financial statements just mentioned are a reflection of the accrual basis of accounting used by businesses to coordinate revenues with their associated expenses. The cash flow statement provides only inflows and outflows of cash equivalents and cash. This means that transactions that have no direct effect on payments and cash receipts are excluded. Among the excluded transactions are depreciation or write-offs on crippling debts or credit loss.

This statement is a cash basis report on three distinct kinds of financial activities, which are investing activities, operating activities, and financing activities. Activities that do not require cash are generally shown in footnotes, and this occurs both under IAS 7 and US General Accepted Accounting Principles. However, GAAP gives the option of including the non-cash activity within the actual cash flow statement, whereas IAS 7 does not. Included under non-cash financing activities are changing debt to equity, leasing in order to buy an asset, making an exchange of non-cash assets/liabilities for other liabilities or non-cash assets, and bestowing shares as a trade for assets. This statement has four main purposes: to provide insight on a business's solvency and liquidity and its capability to alter cash flows in the future, aid in the evaluation of changes in liabilities, equity, and assets, eliminate effects of differing accounting methods by standardizing, and provide insight into future cash flows regarding their timing, probability, and amount. The cash flow statement does away with allocations, which could be byproducts of differing accounting methods, and therefore has been adopted as a standard financial statement.

Now, the two methods (direct and indirect) of creating these statements will be addressed.

The direct method of readying a this statement depicts a report which is more clearly understood than the indirect method, which is pretty much universally utilized, due to the fact that FAS 95 states that companies must provide an additional report similar to the indirect method should they choose to utilize the direct method.

The direct method reports major classes of payments and gross cash receipts. Under the rules set forth by IAS 7, received dividends can be shown under either investing or operating activities. If paid taxes are directly connected to operating activities, then that is where they are reported. If paid taxes are directly connected to financial or investing activities, then that is where they are reported. GAAP (Generally Accepted Accounting Principles) are different from IFRS (International Financial Reporting Standards) because under GAAP rules, dividends received through a business's investing activities is actually reported under the operations activities instead of investing activities.

The indirect method makes its starting point net income, adjusts for all non-cash item transactions, then adjusts from every cash based transaction. Away from net income is taken an increase in an asset account, and given to it is an increase in a liability account. This method turns accrual-basis net income/loss into cash flow by utilizing a system of deductions and additions.

The direct method calculates cash flow from operations from scratch, while the indirect method takes net income and makes adjustments in order to calculate cash flow from operations.

By Jake Barclay----->Article Source: http://EzineArticles.com/7896302

What Accounting Outsourcing Companies Can Do for Your Small Business

In every industry, an important key factor in running a successful small business is making sure that financial matters are handled professionally and efficiently. Performing accounting and bookkeeping in house can tie up important resources, and take up a large amount of time. Accounting Outsourcing Companies can save a small business time and money, as well as offer business owners reassurance that the books are being kept properly.

One unexpected benefit of taking advantage of Accounting Outsourcing Companies can be cost savings. If a small business has accounting and bookkeeping tasks performed in house, a full-time accountant or bookkeeper must be paid a salary. In addition to the savings on salary, outsourcing the job can save money on the benefits, such as health insurance, sick leave, and retirement accounts that would also need to be provided to a full-time accountant. When it comes to a small business, office space can sometimes be scarce; outsourcing accounting to an outside company can save on the room, office equipment, and other supplies that would ordinarily have to be dedicated to a full-time accountant. Another way that allowing Accounting Outsourcing Companies to handle a small business's accounting needs can be helpful is by saving time. Simply put, time is money. A small business can turn a profit much more easily, and much less stress fully, if the owners do not have to work on time consuming bookkeeping and accounting. With the help of Accounting Outsourcing Companies, personnel that would ordinarily have to spend time focusing on accounting work could, instead, spend that precious time on other, more urgent, tasks.

The realm of accounting is not a simple one. One very common reason for using Accounting Outsourcing Companies is that some small business owners just do not have the knowledge and experience necessary to perform accounting tasks both correctly, and in a timely fashion. Using an outsourcing company that specializes in accounting can provide a small business with access to experts who are familiar with the ins and outs of professional accounting. Not only do the professionals that Accounting Outsourcing Companies use know the latest rules and regulations of the business, but they also are certified accountants, with the experience necessary to make sure that all accounting tasks are executed flawlessly. Along with this great benefit, Accounting Outsourcing Companies also often offer twenty-four hour support to their clients. Not only do these companies offer real representatives who can answer important questions over the phone, but online help is also usually available. This kind of access to accounting and bookkeeping information can keep a small business running efficiently by offering relevant and accurate information instantly.

Accounting Outsourcing Companies are becoming quite common, but not all are created equally. It is best to choose a company that offers all of the following services -source to pay, industry-specific accounting, order to cash, risk and compliance, record to report, and corporate functions services. Companies that offer the aforementioned round the clock access to financial records and helpful customer service are ideal for small business owners who lack accounting expertise. However, Accounting outsourcing companies can help any business run more efficiently, and productively.

Business Accounting Services helps many companies cut costs. Amitaabh heads a leading Accounting Outsourcing Service that caters to small and medium businesses worldwide with a structured process to ensure client success.

By Amitaabh Saboo----->Article Source: http://EzineArticles.com/7916036

Outsourcing Accounting Services Work Best for the Busy Entrepreneurs

While some entrepreneurs think that they can take charge of financial records related to how their businesses are doing, it is only practical to consider outsourcing accounting services. When this is relegated to someone else, the burden becomes less and they have more time to run the affairs of their businesses.

Maintaining financial records is time-consuming and can sometimes distract entrepreneurs if they do the work themselves. No company can be truly successful without a professional expert assuming control of this aspect of the business.

Outsourcing accounting services is more cost-effective, especially for small businesses, than hiring someone to keep track of daily transactions. Owners can focus more on the actual operations, which is crucial in delivering significant results whether they are marketing a product or a service.

Business affairs stand a better chance of being run smoothly if owners turn to outsourcing accounting services and let this be handled by a seasoned professional. By doing so, a complete overview of how the businesses have fared can be reached and owners will be guided objectively in finding ways to improve overall operations.

There are four areas to be considered when outsourcing accounting services. The first is bookkeeping. This involves tracking and recording day to day transactions, executing reports, financial analysis, projecting how much taxes should be paid, and other activities. The availability of software programs allows owners to see up-to-date reports which are actually the basis for making decisions.

The second element to be taken into consideration when outsourcing accounting services is the maintenance of business-related credit. This has to be treated independently and separate from that of the owner's personal credit. Most often than not, businesses need to do transactions or maybe secure assets through the use of credit. By monitoring this aspect professionally, the company can establish good credit.

Outsourcing accounting services also involves doing tax reports. Businesses need to accomplish tax returns for submission to the government agency in charge of this. Taxation is a critical matter, because the total amount due for payment will be based on the actual results of operations. Owners need to know if a prospective accountant has the expertise to handle this facet of business well before hiring him or her. This has to be done to avoid making errors when it is time to pay what is due.

The last crucial element that business owners should consider when outsourcing their accounting is the accounts and their updating. Well, with the advent of technology, preparation of reports is no longer as tedious. What is critical though is that the figures presented have to be carefully analyzed before producing the final data. There is no room for mistakes in this area because this can make or break a company.

Outsourcing accounting services offers business owners the opportunity to decide on which direction their companies have to go; whether they need to cut down on expenditure, put in fresh capital, or reduce the workforce. By turning to someone who has the professional capability to maintain accounting records, businesses can be sure they have a partner armed with the vision to guide them on their path to success.

By Amitaabh Saboo----->Article Source: http://EzineArticles.com/7916059

Four Tips Small Businesses Should Consider Before They Outsource Accounting Services

There are several important guidelines that you should take notice of when you intend to outsource accounting services. It is no waste of time to plan carefully before engaging in anything you need to do. Proper planning in this particular case is very worthwhile since it can reduce errors by a great margin. Small businesses especially should definitely implement the following guidelines since failure to do so may lead your business into financial trouble; something that you do not want to happen to you.

1. Does the company really exist on paper or it is conning you?

First and foremost, when it comes to identifying the best outsourcing services, it is very important for you to find out whether the outsourcing company is legally registered. Now that the world is turning digital a lot of people are taking advantage of the change to dupe others and extract money from them.

It is the role of the authorities to look into this, but, at the same time, as a businessperson, it is wise to ensure that your business is safe. In order to accomplish this you should carry out comprehensive research on the legality of the outsource accounting services provider that you may want to work with. This way you will avoid losing your money to conmen. This is not just talk; these cases are on the rise, believe it or not.

In your efforts to establish the right outsource accounting services always check if there are any laws or rules that have been put in place to guide you. If laws and rules exist,then abide by them in order that you get the best result possible.

2. Will outsourcing your accounting services actually benefit you?

The next thing you need to consider is the value that the outsource accounting services actually brings to your business. Does it benefit your business, and if it does then to what extent? If your business stands to gain at the end of the day then the deal is worthwhile and it is right to go ahead. If what your business stands to gain is fairly minimal then it is just common sense to simply walk away.

3. Are they trustworthy?

You business should target building long term partnerships with those providers who administer your business with outsource accounting services. This is because long-term partnerships lead to the development of greater trust and confidence between you and the outsourcing services provider.

4. How easy is it to outsource? Is it productive or not?

The moment you realize that the outsource accounting services are productive then you are safe. At the same time,if you perceive that the service is not flexible enough and is less productive for you then you need to abandon any idea of using it.

In conclusion, if you want your business to be successful outsource accounting services can be of great use to you. However, to find the best one for you, always research prospective services thoroughly to ensure success.

Accurate Accounting Services improves the ability of a firm to focus on business growth while simultaneously curtailing risks and costs. One such leading Accounting Service works for small and medium businesses worldwide.

By Amitaabh Saboo----->Article Source: http://EzineArticles.com/7933631

How Does A Small Business Accountant Help Your Business?

The most basic query a lot of small business owners have when faced with the idea of hiring a small business accountant is why you need accurate accounting service in the first place? You will see along the course of this article as to why that is the case. Without accurate and up to date financials, your small business is as good as doomed. Let's explore why.

Attracting Prospective Investors:

Any small business owner will tell you that there comes a time when you need to scale your business. When you need to diversify and explore unchartered territories. What he will also tell you is that for doing all this, you need capital. So when you approach banks or prospective lenders, you will need financials and here's why. The prospective lender doesn't know you or your business. So how does he know if your business is worth investing in? Here's where the role of the small business accountant comes into the picture.

A Reflection of your Company's Financial Health:

The financials certified by a small business accountant is his window into your business. The financials will tell him all about the health of your company and how good it is doing. He can measure the success of your business by taking a look at the financial reports of your company. You will find numerous reports that say that the cost of capital reduces a great deal if you possess accurate financial reports. Most lenders will not even entertain you if you are not in possession of your reports.

To a lender, your business will always appear more dangerous than it actually might be. So, to compensate for the risk, he will charge you greater rates for the use of his capital. It is not all that difficult to figure out then, that the accurate financials will most likely quell his apprehensions and thus reduce the cost of capital for you.

Filing Tax Returns and Other Annual Reports:

In most of the financial systems, it is imperative to make public the financial reports of the company. Also, these documents are required while filing tax returns. A badly presented financial report can hugely damage the reputation of the company and can make it almost impossible to attract investors and lenders. So your accountant can virtually be your man Friday when you're dealing with bankers. And if your loan application goes through, you have your accountant to thank for.

So those were the main reasons for the need for accurate accounting service.

By Michael A Dudley----->Article Source: http://EzineArticles.com/7918835

What Are the Functions of an Accounting Firm?

This is a question that many people may ask at one time or another during their business careers. Especially when they are starting up their own small businesses, entrepreneurs of both brick and mortar business ventures and / or online business endeavors, may be uncertain about the functions of accounting firms.

There is likely to be a time when you wonder, if you need an accounting firm or maybe you can just use a software or something. (Hint: if you are asking any kind of questions like that, you might want to consider one.)

So to help clear up some of those questions that might be lingering around, we decided to allay your fears and help answer the questions you might be having.

Whether an accounting firm is one, two, or hundreds of expert individuals the basic functions are the same. There are certain functions and characteristics that are expected and inherent. These might include:

• Accounting and / or consulting services

• Trustworthiness

• Reliable staff

• Honesty

But what are the actual accounting functions and / or consulting functions that they are likely to perform you might wonder. That's what we'll go over next.

1. Financial record keeping is one of the primary functions of the accounting services. This may be on paper, but in this day and age it is just as likely to be in an electronic database. Depending on the ingenuity and modernization of the company, they could even be using cloud based applications, but the financial record keeping is basically the same throughout.

2. Internal and external audits are another function that accounting services may undertake. Depending on whether they are fee for hire, on a retainer, etc. their services type in this area may vary, but it is essentially the same auditing process.

3. Tax advisement and compliance is another area you can turn to an accounting firm. This is an area where you should be able to expect a particular level of expertise. Because taxes are a major component of the accountant's role, they should be expected to be up to date and well-schooled on all tax laws.

4. Risk management related to internal audits and internal financial risk processes is an area where an accounting firm may be able to save your company a ton of money. Sometimes having an accounting expert review non-financial processes can give you a new perspective and enormous savings.

5. Strategic goal advising is another possible function you may find benefit in when engaging an accounting services. Because they are fiscally oriented, they all know the benefits and savings associated with many processes within their industries of expertise. Having an accounting services on tap for advising in business expansions, merges, growth projections, etc. could save tons of money in the long run.

6. Business consulting is a final way that accounting firm services might be used. If you are a new business owner or considering a new business adventure, it might be wise to talk to these experts to help you see the realities and the possibilities.

Remember for whichever reason you choose to or need to engage these diverse professionals, they are professionals and their ability is likely to help you no matter what your angle of approach or business need.

By Hermione Cruz----->Article Source: http://EzineArticles.com/7938644

The Benefits of Outsourcing the Accounting Service

The accounting department is responsible for the management of money and funds. Therefore, company accountants are a very important group of people because they play the critical role of determining how the company is spending its resources. If the company resources are poorly managed, the company is likely to fail. The department plays a significant role in billing, making daily payment of transactions, preparation of tax returns and other accounting roles.

It is very important to have a department that is efficiently running. As a result of growing competition, companies need accountants who can manage funds efficiently and offer the right financial advice. Considering that companies are taking every initiative to boost productivity and cut back on cost, many of the companies are taking every initiative to outsource the role of accounting. This has led to the growth of specialist accounting services. The benefits of outsourcing the accounting services include:

· Focus on the core business

Outsourcing helps the company to focus on the key aspects. Therefore, the company gets an opportunity to make use of its available resources optimally, translating into increased productivity. When the company outsources the accounting function to external agencies, the company gets the opportunity to focus on other key functions such as human resources, marketing and operations management while the agency gets to manage the company's finance professionally.

· Reduces the work load

Outsourcing the accounting function helps to reduce the companies burden of work. This translates into improved quality of work. The external sector can play an important role in preparing the accounts, preparing tax returns, advising on financial matters and auditing the company's accounts. This ensures the company's records are ready at any given time and the company's funds are not misappropriated.

· Save substantial amounts of money

Outsourcing means the company does not have to hire many employees in the accounting department. In fact, it may consider hiring one person to play the oversight role. The company will not have to spend money on salary and training the accounting department. As a result, the company can benefit a great deal from making substantial savings. These savings can be channeled to other key functions.

By Elen Moja----->Article Source: http://EzineArticles.com/7951589

Accounting and It's Impact on Business Management

Accounting has been called the language of business and in a very real sense it is. Studying business through the lens of accounting provides a perspective accessible through no other discipline. Accounting takes you deep inside an organization. Every transaction an organization undertakes has an impact on its financial well-being. Accounting tracks those transactions and reports their effects.

If you want to be an expert on France, you would do well to learn the French language. If you want to be an expert on Latin America, a solid knowledge of Spanish would be a great asset. If you want to understand the game of baseball, you need to understand its lingo. So it is with business and its language.

Accounting is part of the bedrock of our culture and economic system. Consider the following: Most of us were brought into this world in a very sophisticated, complex organization - a hospital. The clothes we wear, the food we eat, the cars we drive, the gasoline we put in those cars and the education we receive come to most of us through organizations. When we die it's more than likely we'll be laid to rest by an organization. In other words, virtually every aspect of our lives, in one way or another, is affected by organizations.

It's probably impossible to overstate the importance of the role organizations play in our daily lives. Take them away and we would live in a very different society. Without the information accounting provides to managers of these organizations, commerce as we know it today would not exist. Rather, it would probably be carried on through some sort of rudimentary barter-style economy.

All the organizations we depend so much on cannot stay in business without effective management. Read the business section of your local newspaper for a week and note the businesses and nonprofit organizations that are quitting operations. For one reason or another, these organizations did not satisfy the needs of their potential customers in an effective manner. So, perhaps it is not hyperbole after all to say that organizations are central to our wellbeing and our way of life and that accounting plays a very important role by providing information necessary for their effective management.

The performance is very likely to be evaluated on the basis of accounting numbers. (Did you meet your budget? Are your overhead costs under control? What drives those overhead costs? What are the profits and return on investment your division earned this past quarter?) Understanding what accounting numbers mean, what they don't mean and how they can be used for your benefit is vital to your success.

By Tina S Smith----->Article Source: http://EzineArticles.com/7935220

Basic Accounting Terminology and Confusions

Accounting terminology can sometimes be confusing to an experienced analyst, let alone a novice. This is because different authors use different terms to mean the same thing. For example, take the so-called "bottom line" on a firm's income statement. This is variously referred to as earnings, profit and/or net income. These are not to be confused with operating income, a very different concept. Owners' equity on one balance sheet (aka statement of change in financial position) might be referred to as stockholders' equity; it's also sometimes referred to simply as net worth. Or consider the number derived from subtracting a firm's cost of goods sold from its revenues. It is sometimes referred to as gross profit. On another income statement it might be listed as gross margin. These are not to be confused with contribution margin, which means something entirely different. To add to the confusion, different writers and financial services sometimes use different formulas in calculating financial ratios such as return on assets. To overcome these potential problems, keep in mind the context in which a term is employed and be consistent in your own analysis.

A description of the basic accounting framework.

• Be aware of the different purposes accounting serves;
• Understand what an account is;
• Understand the difference between accrual and cash accounting;
• Know the two equations which underlie the income statement and balance sheet, respectively;
• Gain insight into a basic income statement, balance sheet, source and use of funds statement and a firm's operating cycle.

Accounting serves several purposes, all at the same time. The following are some examples:

1- It's used to keep score. It answers questions like "How are we doing?" Are we making a profit? If so, how much? Are we losing money? How is the West Coast division doing compared to the East Coast division?

2- It directs attention to problems and opportunities. Is our inventory getting too large? Is our product getting out on time? Are we collecting our accounts in a timely fashion? What is happening to our profit margin?

3- It provides information needed to control costs. Before managers can control costs they need to know how much the costs are, how much the costs should be and what it is that causes them. A properly designed accounting system will provide this information.

4- It provides information needed for planning. Before managers can make plans they need to know how costs and profits react to changes in volume and production methods. For example, some costs will change proportionately with changes in production, some will change more than proportionately and some will not change at all.

5- And it provides information for decision making. Should we make this component ourselves or should we outsource it? Should we buy or lease a piece of equipment? Do we want to accept this special order at a price below our normal sales price? Again, a well-designed accounting system can provide a treasure trove of information that will help managers answer these kinds of questions.

By Tina S Smith----->Article Source: http://EzineArticles.com/7969561

The Conceptual Difference Between Financial and Managerial Accounting

Accounting can be segregated into two types - financial and managerial. The two have a lot in common, but their main differences lie in the fact that they have different audiences. Financial accounting is directed to users outside the firm - investors, creditors, suppliers and regulators. Publicly traded companies generally want this information to be widely circulated and easily obtained. Without available information, investors are not going to invest their funds, creditors will not make loans and suppliers will not provide much needed credit. Furthermore, the Securities Exchange Commission (SEC) requires this information to be published. To see just how easily available this information is, do a quick Google search. Type the name of the publicly traded company in which you are interested along with "financial statements." You will instantly get their entire audited financial statements.

Managerial accounting, as the name implies, addresses the needs of management. The information needs of management are decidedly different than the needs of outside investors. Furthermore, this information is proprietary. Most companies don't want you or their competitors to know such things as their variable costs per unit, their breakeven point for different products, or their manufacturing overhead rates.

Financial accounting is regulated by the SEC and the Financial Accounting Standards Board (FASB). Together, they establish the rules for financial accounting. These rules are the so-called "Generally Accepted Accounting Principles". Other organizations such as the American Institute of Certified Public Accountants (AICPA), the Institute of Management Accountants (IMA) and the American Accounting Association (A.A.A.) play a lesser role in establishing accounting principles, but the FASB and the SEC are the primary forces in the establishment of G.A.A.P.

It's important for firms to follow G.A.A.P for external reporting. To enable you, as a potential investor, to choose between investing in two or more different companies, the companies must all follow the same rules for measuring revenues, expenses, assets and liabilities. Otherwise, you will have no basis for comparing their respective performances. It would be like comparing apples and oranges - or perhaps big apples and little apples. "Good" financial accounting, therefore, is that which consistently follows common rules laid forth by these two organizations.

Managerial accounting on the other hand is not regulated. A management accountant might say, "Rules? What rules? We don't need rules." And he or she would be right. The sine qua non of managerial accounting is simple: does it provide managers with the information they need to plan, organize, control and make good decisions? If it does, it's good. If it doesn't, it isn't. It's that simple. A well-designed accounting system provides good information, and good information leads to good decisions.

A common set of rules for management accounting, unlike financial accounting, doesn't make sense. Why so? The management of different types of companies have very different needs when it comes to information. The manager in a manufacturing firm will need different types of information than the manager in a department store, who in turn will need different information than a bank manager, and so on.

By Tina S Smith----->Article Source: http://EzineArticles.com/7945868

Accounting: Today and Before

To understand how to use accounting data, first understand that the basic accounting framework is an amazing system of recording, verifying, summarizing and reporting business transactions. It is truly a thing of beauty.

The most fundamental component of that framework is an account. An account is simply a device, a pigeonhole if you will, to logically order whatever it is we want to keep track of. Want to keep track of cash? Create a cash account. Want to keep track of inventory? How much people owe us? How much we owe others? How much are our sales? Our expenses? Create an account for each. Accounts can be created and destroyed at will. Maybe we sold a building. If so, close the building account and get rid of it.

Back in ancient times BC (before computer), creating or closing an account was as simple as putting a sheet of paper in or taking it out of a loose-leaf notebook. Today it can be as simple as creating or deleting a column in an Excel spreadsheet.

Modern accounting rests on a marvelous invention called double entry bookkeeping. Double-entry bookkeeping is a method of recording every transaction an organization makes. Every transaction that a company makes will have an impact on two or more accounts. At least one account will be debited and at least one will be credited. And remember that debits will always equal credits.

Structurally, accounts are very simple. They have three parts: a title (what we're keeping track of), a left-hand side and a right-hand side. That's it. We call the left-hand side the debit side and the right-hand side the credit side. When we debit an account, we simply make an entry on the left-hand side of the account. A credit is made on the right-hand side. Debit does not mean increase or decrease. It means left and that's all. Some accounts are increased when debited and some are decreased. The same holds true for credits. It all depends on the type of account. Sailors say "port and starboard." Accountants say "debit and credit."

There are five basic categories of accounts, with some variations thrown in to make it interesting. The five categories are: revenue, expense, asset, liability and owners' equity and, of course, there are many examples of each.

• Revenues are inflows of cash, increases in other assets or the settlement of liabilities resulting from the sale of goods and services that constitute an organization's principal operations.

• Expenses are the outflows of cash, the decreases in other assets or the incurrence of liabilities resulting from the performance of activities that constitute an organization's principal operations.

• Assets are the resources (tangible or intangible) which provide future economic benefit to their owner.

• Liabilities are the obligations of an organization to transfer assets or provide services to another entity.

• Owners' equity is the owners' claim to the net assets (assets minus liabilities) of an organization. There are two types of owners' equity accounts - paid-in capital and retained earnings.

By Tina S Smith----->Article Source: http://EzineArticles.com/7954263

QuickBooks Accounting Is Simple, Powerful and Comes With Help

Managing small business financial affairs is performed with accounting. The preferred and effective accounting software that numerous enterprises use is QuickBooks. This amazing tool is engineered and offered by Intuit. In 1983, two people, Tom Proulx and Scott Cook, established the Intuit company. Considering QuickBooks allows for any individual with modest education in accounting to implement its software program, it became incredibly well known. A vast majority of the small business market segment began to utilize it when it was originally released. The vast majority of the market remains obtained by QuickBooks.

Two products are offered to enter financial data into QuickBooks software. The first solution is through a desktop program while the secondary alternative is through a web based program. While QuickBooks presents the two kind of accounting solutions, they really don't possess the very same functions in accounting. The advancement of QuickBooks through the years has been considerable since its primary introduction. QuickBooks permits for any kind of financial transaction that a business requires to record possible because this software has features which allows the ability to record them all. QuickBooks uses a double entry design to produce its financial documents. The possibility of having an accrual based system or a cash based system of accounting is obtainable. A double entry process permits QuickBooks to confirm that all financial transaction entries are properly entered into the central general ledger statement. It becomes vital to attain QuickBooks help soon after setting up this accounting application. A business operator immediately discovers that this package includes a considerable amount of features and properties. One capability that is important to maintain, yet very easy to get confused with, is the payroll function.. Thankfully there is a possibility in getting QuickBooks help from a properly trained professional.

When seeking QuickBooks help, the recommended approach is receiving a certified Intuit QuickBooks ProAdvisor. When looking for these profoundly skilled people, you will learn that they usually have years of practical experience working with QuickBooks. They are in a position to setup any business owner with a brand new accounting system using their specialized expertise and understanding. It is not uncommon that a difficult dilemma appears when dealing with a range of financial transaction. As soon as a troubling circumstance arises, these ProAdvisors are able to help. Just because QuickBooks makes it possible for simple data entry into the system, one really should still substantiate that the statements that are produced are accurate. The maintenance of this application will require QuickBooks help from a professional because it has a considerable amount of capabilities.

True Bookkeeping Talent offers QuickBooks Help for any person who seeks it. Check out our site. We have free resources that educates on how to run a better business.

By Mark True----->Article Source: http://EzineArticles.com/7965380

Basic Accounting Terminology and Confusions

Accounting terminology can sometimes be confusing to an experienced analyst, let alone a novice. This is because different authors use different terms to mean the same thing. For example, take the so-called "bottom line" on a firm's income statement. This is variously referred to as earnings, profit and/or net income. These are not to be confused with operating income, a very different concept. Owners' equity on one balance sheet (aka statement of change in financial position) might be referred to as stockholders' equity; it's also sometimes referred to simply as net worth. Or consider the number derived from subtracting a firm's cost of goods sold from its revenues. It is sometimes referred to as gross profit. On another income statement it might be listed as gross margin. These are not to be confused with contribution margin, which means something entirely different. To add to the confusion, different writers and financial services sometimes use different formulas in calculating financial ratios such as return on assets. To overcome these potential problems, keep in mind the context in which a term is employed and be consistent in your own analysis.

A description of the basic accounting framework.

• Be aware of the different purposes accounting serves;
• Understand what an account is;
• Understand the difference between accrual and cash accounting;
• Know the two equations which underlie the income statement and balance sheet, respectively;
• Gain insight into a basic income statement, balance sheet, source and use of funds statement and a firm's operating cycle.

Accounting serves several purposes, all at the same time. The following are some examples:

1- It's used to keep score. It answers questions like "How are we doing?" Are we making a profit? If so, how much? Are we losing money? How is the West Coast division doing compared to the East Coast division?

2- It directs attention to problems and opportunities. Is our inventory getting too large? Is our product getting out on time? Are we collecting our accounts in a timely fashion? What is happening to our profit margin?

3- It provides information needed to control costs. Before managers can control costs they need to know how much the costs are, how much the costs should be and what it is that causes them. A properly designed accounting system will provide this information.

4- It provides information needed for planning. Before managers can make plans they need to know how costs and profits react to changes in volume and production methods. For example, some costs will change proportionately with changes in production, some will change more than proportionately and some will not change at all.

5- And it provides information for decision making. Should we make this component ourselves or should we outsource it? Should we buy or lease a piece of equipment? Do we want to accept this special order at a price below our normal sales price? Again, a well-designed accounting system can provide a treasure trove of information that will help managers answer these kinds of questions.

By Tina S Smith----->Article Source: http://EzineArticles.com/7969561

Why You Should Use Professional Accounting Services for Your Small Business

Many small business owners prefer doing their own accounting, thinking they can save money and have good control over their business's financial aspects at the same time. While basic bookkeeping may seem relatively easy to do, there are many reasons why small business owners are better off engaging the services of accounting and bookkeeping firms. Here are the most important benefits business owners can gain from choosing professional accounting services for their small businesses:

1. Avoiding accounting mistakes that impact your bottom line

When starting your small business, it might take a while to understand and become familiar with the rules and legislation regarding accounting and tax in the UK. This is why it is always a good idea to seek professional accounting advice from the outset. Mistakes such as misclassifying expenses, not keeping a good record of receipts or not reconciling your books with your bank statements can cost your business significantly by the end of the financial year, and it can all be avoided with the help of an accountant.

Accounting professionals can help you save both time and money by keeping accurate and consistent records of your expenses and transactions, correctly inputting and keeping track of all invoices and bills in affordable accounting software, advising on deductible costs and expense claims available to small businesses and keeping a tidy paper trail of your accounting documents.

2. Timely and efficient bookkeeping and statutory accounts

Keeping timely, accurate bookkeeping records for your small business is not only mandatory but makes a sound business practice, allowing any owner to have visibility over their business's profit and cash. Having your accounts updated on a monthly or quarterly basis is the best way to achieve this kind of visibility and keeps all your paperwork in good order, before it turns into an accounting nightmare.

This is where making use of professional accounting services proves to be extremely valuable, as they ensure your business's bookkeeping is done efficiently and in a timely manner. Most small business accounting specialists will assist you in collecting all your business's bookkeeping records on a monthly basis and quickly produce the yearly statutory accounts, including calculations of your corporation tax liability, at the end of the financial year. This timely accounting procedure will allow you to efficiently plan next year's budget and cashflow forecasts.

3. Saving precious time that you can use to focus on your core business

Done properly, bookkeeping can be quite a time-consuming activity. It accounts for up to 20% of the working hours in the case of a small business owner, and this percentage can go up if you take into consideration other related tasks such as filing tax returns and payroll.

Contracting the services of accounting companies has the benefit of alleviating small business owners of this somewhat distracting admin work, allowing them to spend more time on growing their business operations, meeting more clients or marketing their business. Even when bookkeeping records are kept in-house, small business accounting companies often offer valuable support by providing templates that help business owners organise their day to day finances, access to streamlined online accounts portals and accounting advice in real time.

4. Drawing business advice from your statutory accounts

But maybe the most important reason why you should hire external accounting services for your small business is the wealth of financial knowhow and business advice you will have access to.

Top accounting companies provide more than just bookkeeping and admin support for keeping your paperwork in good order. Accounting specialists can help you understand the difference between cash flow and profits and how to read your statutory accounts in a way that helps you better prepare your small business for future growth; they are able to closely monitor key indicators in your business's financial activity such as trade debtors, trade creditors, payments and cash flow, and advise on the best strategies to secure the financial health of your small business on the medium and long term.

By Charles Crest----->Article Source: http://EzineArticles.com/7967437