Business Accounting: An Overview
Don't ever let your business get ahead of the financial side of your business. Accounting. Accounting. Accounting. Know your numbers. Tilman J. Fertita
Yes, accounting is all about the numbers and number crunching. However, is there more to accounting than just the number crunching aspect?
Can you confidently say that you know everything about accounting in the twenty first century world?
With a degree in accounting or after having pursued your accounting diploma, you may have learnt many skills that allow you to enter the field of accountancy. But can you define business accounting?
When we define business accounting, we see it as the bookkeeping or managerial accounting aspects. Again, you must remember that when it comes to business accounting, it is deemed important since it deals with all the financial activities of an enterprise.
Everything from record keeping, to the business budgeting is dealt with in the business accounting aspect of accounting. Again, any financial information gathered by business accountants tend to be used to make all the financial related decisions in a business.
Along with the business accountants in a business, there are also management accountants. First and foremost, you must be able to understand what accounting really is. Let us explore what the definition of accounting is and take the discussion further to explore how accounting is used in business.
What is the Definition of Accounting?
"Life is like accounting, everything must be balanced." Unknown
One way to define accounting is to define it as working with numbers in such a way that everything balances out. While that might seem like the most accurate definition of accounting, there are several other ways of defining accounting.
You may want to read our article entitled: what is accounting?
According to the Bench Blog penned by Ryan Smith, accounting can be defined as business records and as financial statements. In this Bench Blog, just like Forbes, it is stated that accounting refers to a huge machine where you can put raw financial information and receive concrete information about a business's transactions in the form of a story.
In other words, accounting provides the bigger picture of a company's financial position.
Now that we looked at the bigger picture of how accounting can be defined, we can take a peek into how we can see accounting in business.
Find out about grade 12 accounting lessons in South-Africa here on Superprof.
What is Accounting in Business?
In every business, accounting plays an important role. Every single function of a business, from paying the bills of low-level staff to advising the CEO, all these functions are handled by accountants in the business. In very small businesses, there must be at least one accountant providing these services to the business. However, in a very big firm, many accountants are needed.
Accountants within a business do everything from reporting and analysing income and expenses to communicating business transactions. Business transactions can be communicated in the form of financial reports. From the financial reports, accountants can use statistics to plan future budgets as well as forecast possible future transactions.
In every business, there are also accountants working in all financial sectors including those working on taxation and those involved in financial reporting.
Accountants in business are busy completing tasks such as:
• The management of financial systems and budgets by using spreadsheets and accounting programs
• Undertaking financial audits
• Liaising with clients to provide financial information and advice
Again, the business is as strong as its accountants. Accountants in a business engage in all the accounting work and account for every transaction in a business.
What is Accounting for Businesses?
Accounting in business is of utmost importance as it is due to accounting a business can tell where all the finances are going in the business and how much money is coming. Accounting is responsible for all the funds coming in from external parties and all of the money going out in the form of employees' salaries, buildings costs, advertisements.
Do you remember the Cash Receipts Journal (CRJ) and the Cash Payment Journal (CPJ) that you covered in Economic Management Sciences (EMS) at a school level?
Well, accounting is important for recording all the cash payments going out of a business and all the cash payments coming in to the business.
Accounting for bussiness is important as it is the accountants within a business that take on various roles such as:
- Auditor
- Accounting Clerk
- Chief Financial Officer
- Financial Analyst
- Financial Advisor
Role of Accounting in Business
Accounting is needed in businesses and accounting is needed for businesses to run smoothly. The role of accounting or rather that of an accountant cannot be overstated. An accountant is someone who has good numeracy skills and someone who can manage figures well.
Accounting in a business is important as it is the accountant who makes the most of accounting practices and principles in order to make the most of the finances that the business has.
In every business-whether a small medium enterprise (SME) or a larger company, accounting is necessary and the role of an accountant or that of accountants cannot be overstated.
In order to be an accountant for a business, you would need to have completed a degree in accounting or a respective business degree. Smaller companies do accept accountants who have merely completed an accounting diploma as opposed to having done the accounting degree.
Having learnt all about accounting theory through accounting courses like undergraduate programs at universities, should enable future accountants to account for something in the business world. Accountants can surely account for something in their respective businesses if they paid attention to the basics of accounting as well as to the fundamental principles of accounting.
Most accounting courses ten to cover the fundamental basics of accounting, accounting standards and the ethics of money within the business world.
If you are still unsure about accounting basics, read the article entitled An Introduction to Accounting. You may also want to revisit the golden rules of accounting if you seem to have forgotten all about ethics and ethical requirements in the business world.
Since the role of an accounting entails much more than knowing basic accounting and expands to include using software like Microsoft Office Excel and SAGE Pastel, you may want to lean on a private Superprof tutor to help you understand the requirements of each software.
The role of the accountant in business
Yes, accounting itself does have a rather important role in business, however, it is the accountant that plays an important role in business as well.
The role of the accountant is to keep accounting for something and to keep thriving. When accountants are chosen for a particular role, the respective company does look at the qualifications of an accountant. If you are competing for an accounting position, your qualification does matter. The HR manager of the company will look at whether you are a university masters graduate or a college graduate. Alongside degrees, your work experience also makes a difference.
You are seen as an ideal candidate if you have spent time working in the field and gaining experience while the other prospective employee have merely been studying in educational establishments. Workplace experience may set you apart from other candidates and may in fact secure you a position as an accountant in a company.
When you get hired as an accountant for a company, you need to remember that in the field of accountancy, you need to constantly work your way up.
When you first get hired as an accountant, you will get hired in an entry-level position and you need to work yourself up to a more advanced accounting position.
The best learning as an accountant happens through on the job training. Hence fresh graduates who have completed their accounting degrees are advised to work while pursuing their accounting honours. In this way, these aspiring accountants get on the job training as well as the needed book knowledge to help them excel in the field of accountancy.
Sometimes, you may find it hard to grasp all the accounting terminology, principles and formulas. In this case, we suggest you get a helping hand in the form of a Superprof tutor.
With a Superprof accounting tutor, you can take face-to-face lessons or even opt for online lessons.
Improve your accounting skills by taking accounting courses online on Superprof.
Summary of Accounting
Again, it is impossible to settle on just one definition for the term, "Accounting." However, you must remember that one of the best ways to define accounting is that it encompasses the communication, recording, analysing, interpretation and presentation of a company's financial information.
Within every organisation, the responsibility to handle the financial operations of a business falls squarely on the shoulders of an accountant or on the shoulders of all the accountants within a business. Accounting in a business is so very important since through accounting, accountants can become aware of all the financial operations of a business.
Knowing the finances of a business helps accountants to make the right decisions and forecast the right next financial moves for the business.
To summarise it all, accountants within a business surely do account for something and they are accountable for all the transactions of a business.
Enjoyed this article? Leave a rating!
Loading...
