Finance Guide

Accounting is the practice of keeping precise records of the income and expenditures of a business. It is a recognised profession, regulated in most countries by an industry association which offers training and certification to aspiring practitioners.

At the most basic level, accounting is necessary to determine whether the business is profitable or not. Although this may seem obvious, some businesses can be involved in so many transactions that it is not at all clear whether, on a net basis, a profit is being made. Precision in the keeping of accounts is also necessary for taxation purposes. In most countries, companies must pay a tax on any profits they make and are required to submit records periodically to the government detailing their income and expenditures. Many companies can also enjoy tax relief on certain kinds of expenditure, such as money spent on research or on business capital investment.

For anything other than a small business, keeping careful records of business activity, paying taxes in the appropriate amount and claiming any tax relief for which the company is eligible is a non-trivial activity which demands substantial knowledge and commitment. You can also hire professionals like Associated Tax relief for such a task.

Accounting standards vary from one country to another, making the comparison of, for example, company balance sheets not as simple as it might at first seem. There are moves to establish international accounting standards, eliminating this problem.

The worst part about cheap loans in the moneysupermarket, apart from the fact that they are a bad credit loan is that they are graded worse than payday loans in the debt collection law.

Book-keeping is the practice of maintaining a careful record of all of a person or organisation’s income and expenditures. In modern times, book-keeping is often regarded as essential so that a person or organisation can discharge tax obligations to the government fully and properly. Book-keeping is less complex than accounting but proper book-keeping is an essential preparatory stage in the completion of proper accounts. Within corporations, trained personnel are usually employed to carry out book-keeping duties, although these people are not usually fully trained accountants as the task does not require that level of expertise.

A variety of book-keeping systems exist. The simplest is called single-entry book-keeping. It involves recording each disbursement of money the company or person makes to an external entity and any payment made by an external entity to the person or company.

Double-entry book-keeping is a more complex system which was first developed in late medieval Italy. It involves each transaction being recorded in two separate columns. Such book-keeping systems involve maintaining columns for separate aspects of the company’s financial life, such as Bank, or Supplies. Double-entry book-keeping is regarded as more accurate for the purpose of keeping records of complex financial entities and it forms the basis of modern corporate book-keeping practice.

What is Accounting?

What is Book Keeping? 

In accounting terms, an asset is an economic resource controlled by a company which is expected to produce benefits to the company in future. Assets are categorized as either current assets or long-term assets. Current assets are assets whose value can be realized in a short space of time and readily converted into cash (if they are not cash already). Examples of short-term assets include debts which are due to be paid by others, inventories of goods which the company has produced for sale or bought for use as inputs in its own business processes, cash or readily saleable financial securities. Long-term assets are assets which are fairly illiquid. Examples would include things such as property or factory or office equipment. Land which is owned by a company, or rights to exploit any mineral wealth within a particular area, would also be considered long-term assets.

Some assets are intangible in nature. These would include things such as intellectual property rights, good reputation and goodwill. It can be difficult to quantify the value of intangible assets. There is also a certain amount of variation between countries in how intangible assets are treated in the preparation of a company’s set of accounts.

What is Accounting

What is an Asset?

An accountant is someone professionally trained and accredited to handle company accounts. Incorporated companies are required to file sets of company accounts on a yearly basis. Failure to file accounts in a timely fashion, or in a way that complies with the many laws and regulations surrounding the practice, can result in both civil and criminal penalties for the company and its officers. Accountants familiarise themselves with the laws and regulations prevailing in their countries and apply that knowledge to make sure that their client companies don’t fall foul of the law. Some accountants work as independent professionals; others are employed in specialized accountancy firms; still others work for companies large and wealthy enough to need the services of a full time accountant.

The tax regulations in most countries are extremely complex. In many cases, exemption or relief from tax can be claimed by companies or individuals in relation to certain kinds of spending. The average person, however, usually lacks sufficient awareness of the tax regulations to be able to take optimal advantage of them to pay as little tax as possible. A skilled accountant will have a deep awareness of these issues, however, and will be able to advise clients or present accounts in such a way as to minimize tax liabilities.

What is Accounting?

What is an Accountant?