The comprehensive preparation of records for all financial transactions in a systematic way in a business is known as accounting. Since there are agencies that oversee activities such as auditing in a business as well as the entities required to collect tax, accounting may also include activities such as making summaries of the financial transaction reports, analysing them and making reports on all these transactions. Accounting is very crucial for all business and depending on the size of the organizations, accounts can be handled by accountants and bookkeepers for the small entities and a finance department with a number of employees for large companies. It is through the reports provided from the accounting sections that enables businesses to make informed decision. Bookkeeping and tax preparation are some of the roles carried out by those individuals who engage in accounting in a business.
Bookkeeping involves recording all transactions in a business such as sales, purchases, receipts or payments that have been made to an individual or another organization. The bookkeepers records all cash and credit transactions in the respective books such as supplier’s ledger, daybook, customer’s ledger and the general ledger. With proper bookkeeper’s record, an accountant is able to come up with reports on the financial situation of the business. There are two common entry systems in bookkeeping which includes single-entry and double-entry bookkeeping system. Single-entry bookkeeping uses only expense and income accounts which can be recorded in the journal for expenses and revenue. In the double-entry bookkeeping system, two entries for accounting are required to make records for the transactions and can occur in the liability, asset, expense, equity or the revenue accounts.
Appropriate tax returns can be filed for the business to the responsible body every year in the process known as tax preparation which is a role in the accounting field. Other people who can do the tax preparation includes tax preparer, certified public accountants, attorneys or even enrolled agents at a fee. Tax preparation through processes such as calculation of the total tax amount and filing the tax is crucial for a business which ensures that it is compliant to the laws of the region it operates.
There are certain qualities that show an individual can work well in the accounting section in a business. Professionalism and ethics are important and should be followed to the letter to ensure they do not expose financial information to unauthorized persons. Verbal and written communication is essential which ensure that they can provide proper guidelines in all issues pertaining to finances. They also need to have proper customer relations more so those that interact with customers every now and then in the business such as when serving them and addressing issues.