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.

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A balance sheet is a financial statement which describes a company’s overall financial position at a moment in time. It is considered one of the most important forms of financial statement and, in many countries, there is a legal requirement that companies submit a balance sheet to the government on a periodic basis (usually yearly), along with other accounting information. Failing to submit a balance sheet on time can result in civil or criminal liability for the company’s officers. Usually, balance sheets so submitted will be available for public inspection.

A balance sheet lists all the liabilities and assets of the company. When all of these are summed together, the end result should be zero; hence the name. Assets include cash the company has available, property, inventories of goods, equipment used for the operation of the business, amounts the company is owed by other companies, individuals or the government, as well as less tangible things such as copyrights, trademarks, goodwill and reputation. Liabilities include debts the company owes to other companies, to investors, consumers or the government.

A balance sheet is useful for giving a quick overview of a company’s financial position and, as such, is used by investors, civil servants, and stock market analysts, among others.

Excess of loans, whether it is personal loans or car loans, as long as they are unsecured loans, they will not be contributing towards debt remission.