Showing posts with label Accounting Glossary. Show all posts
Showing posts with label Accounting Glossary. Show all posts

Sunday, August 30, 2015

Becoming an accountant – know the definition of an accountant

The job of an accountant is one of the most common professions that people choose most of the time, if he or she has studied accountancy and commerce. However, what the job of an accountant is and what tasks he or she has to perform is something that not many students and people know, but they need to know.

What is an accountant?

At first, you need to know the definition of an accountant. An accountant is a professional person, whose task is to perform accounting functions. These functions include auditing tasks as well as analysing financial statements. An accountant must be trained in bookkeeping and also in the preparation of the annual reports, making decisions and planning for financial statements. Advising on tax laws as well as guiding one with proper investment opportunities is also the task of an accountant.

An accountant can be appointed by a large accounting firm or a business company that has its very own accounting department that requires more than one accountant to take care of the accounts and for bookkeeping. If the accountant is not hired by any company or accountancy firm, he or she can also work on his or her own, by managing or taking care of the accounts of different small scale businesses and entrepreneurial initiatives.

Job of an accountant:

If you want to have a safe a secure job profile that will always have a demand in the market, then the profession of an accountant is the best one. However, for that, you will need to have a professional degree in commerce and accountancy studies. You must know the definition of an accountant and what roles an accountant has to perform in his career.

Along with professional degree in accountancy studies and in the field of commerce, you must also start to work under a skilled and established accountancy firm, before aiming high. Once you have gained experience in that field, you will be able to acquire a good job in a reputed firm or in a business company. Experienced and skilled accountants are always in demand and they can get a good deal of salary.


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Thursday, April 9, 2015

Give example of simple balance sheet | MYACCOUNTINGINFO.NET


Financial statements have been described as the final result of outcome of transactions among specific entity, individuals and companies. The transactions could include general cash flows, purchases and sales. Several financial statement types exist, which include simple balance sheet, cash flow statement, owner’s equity change statement and income statement.

Simple Balance Sheet


Balance sheet

Balance sheet is regarded to be a statement, which describes financial position of an entity at a specific point of time, which is usually at the accounting period’s completion. It tends to depict the owners’ equity, liabilities and assets.

Equation of balanced as followed: 

Assets = Owners Equity + Liabilities

The equation’s two sides balance out, the reason why statement is known as Balance Sheet.

  •  Assets: These are economic benefits which would be controlled and acquired by the organization due to past transactions. The fact is that assets are tangible and include accounts receivable, equipment, inventory and cash. Assets could be broken further into long and current term. Current assets like accounts receivable and cash are assets, which could be converted to cash or benefit the organization in a year. Long term assets include inventory, equipment and land are paid off. It benefits the organization over extended time period. Accumulative depreciation is utilized on balance sheets for explaining as to how long term asset costs are ‘used up’ while running a simple or a huge business . Cost is spread across asset life. 

  •  Liabilities: It is termed as amounts that other organizations are owed to, like asset transfer, services to be provided. It also is created of long term and current liabilities. The latter is said to be those which would be paid within a year, including notes payable, accounts payable, payroll taxes and long term debt maturities. Long term debt is paid off across extended time period.

  •  Owner’s equity: It is also known as net assets. It is regarded to be the entrepreneur’s ownership rights after subtracting liabilities. Few examples include additional paid-in capital, retained earnings and common stock. 

Purpose of Balance Sheet

  • Firstly, entrepreneurs make use of balance sheets to simply analyze the capabilities and strengths of the business.

  • Secondly, it describes trends, more specially in accounts payables and receivables area. 

  • Finally, it is examined by investors, vendors and banks for determining credit amount to be provided to the entity.


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Wednesday, March 25, 2015

What is accounting and who are the user within it?

To answer the question what is accounting, it is the system of information through which business activity, processing data on numerous reports, communication with decision makers can be done. It is a myth that accounting is a special language of business. The language should be understood by the business owners for betterment of the business. Understanding the calculation of income is the main concept of accounting. 
 
Accounting Required to Whom:

what is accounting

Accounting is a simple calculation of money to the individuals. It facilitates them to find out some cash from the lump sum amount to save every month. Accounting helps to determine the exact amount of expenditure from the salary. Even it is required every time and every footstep. 

Accounting is something special to the business owners. They use the term for setting their goal of business. For calculating the development of the target and for assigning financial adjustments accounting is required by them when they need. Financial statements provide information to the businessmen for betterment of the business and to make decision. On the basis of these statements, they can purchase advanced machines, again they can stop further investment. So accounting helps them to stay away from unnecessary mislaying of the company.

Accounting plays different role to the investors whether they invest more for a particular company or not. The investors can monitor the status of invested money through the financial statements of that particular company. Even they can invest more money in retirement plan rendered by the company or IRA contribution. Knowing the financial statements help to decide which one investment plan has to be picked. A person or a creator can use accounting for evaluating the ability of the business organization for making loan payment by reading financial statement. The individuals and business owners can get the advantages of tax deduction by reading the accounting records.

The Profession on Accounting:

The profession on the basis of accounting is really demanding forever. Every business organization and company requires efficient accountants. In that case CPA and CMA degree is needed for the aspirants to get this glamorous job.   


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Sunday, March 8, 2015

Sample of Accounting Equation | MYACCOUNTINGINFO.NET



Accounting equation is the very basic concept of accounting. Without this, it is impossible to understand the higher, more complex topics. Thus, when you are studying accounting equation, it is best to be proficient and fluent with all concepts and variables of this particular topic. 
Accounting Equation

It is easier to understand when you have samples and examples at hand, to work with. Although this equation is basically simple, it is the foundation upon which the whole world of accounting rests.

The equation in itself is simple. It says that the assets are always equal to the liabilities. The liabilities are that of the owner’s and also of the creditors. This equation holds true for every single transaction, without exceptions or conditions.

Explanation of the Accounting Equation

The equation in itself is not very difficult to understand. It says that the total assets equal the total liabilities. As mentioned above, liabilities can be that of the owner’s or of the creditor’s. Thus, it can also be said that the total assets equal the total outside liabilities, along with the total owner’s liabilities. Outside liabilities is another name for creditor’s liabilities. Hence, it can also be said that total assets are equal to total creditor’s equity along with the total owner’s liability. Thus, as a conclusion, it can be said that total asset equal the total creditor’s equity, along with the owner’s capital and the total income from which the total expenses must be reduced.
Total assets = Total creditor’s equity + (owner’s capital + total incomes – total expenses)

Conclusion of the Equation

When you are working out the samples of the accounting equation, it becomes evident that there are some set conclusions and results that you are bound to see. Every single transaction results or concludes in an equal effect to asset and liabilities, plus the capital. The initial balance with which you start is equal and so are the changes that arise from the equation. By the rules of geometry, the equation can also be written as Liabilities = Assets – Capital, as was established in the equation mentioned above, or even Capital = Assets - Liabilities. 

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The accounting equation



 
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Wednesday, February 4, 2015

What are the Accounting Concepts?

Accounting is the most important function of every size business as it is based on certain accounting concepts and values and is different from book keeping. In fact, accounting is the process of dealing out with the bookkeeping statistics and obtaining some significant information from it.


What are Accounting concepts?


Accounting concepts are a set of wide principles which have been formulated to provide a fundamental outline or agenda for financial reporting. Basically, financial reporting involves certain specialized judgments’ by skilled accountants and these principles and concepts make sure that the users are not deluded by the acceptance of accounting policies and performance which go against the will of the accountancy profession. Therefore, the accountants must consider whether the accounting treatments are reliable with the accounting concepts and principles or not.

Accounting Concepts
Following are the concepts and principles of Accounting

  • Reliability
The information is reliable when the accountant or the user depends upon it to be perfect only if it loyally represents information that it claims to present. Well, certain omissions reduce the dependability of information in the financial statements.

  • Relevance
Information need to be appropriate to the decision making needs of the accountant as it helps the users in forecasting the future trends of the business or to confirm or correct any of the past predictions. 

  • Neutrality
Information contained in the financial reports need to be free from partiality and should reflect a balanced view of the affairs of the organization without challenging to present them in a preferential or special way. It must be neutral without any partiality. 
 
  • Faithful Representation
There needs to be trustworthy in presenting the financial statements with honest transactions which occur all during the period. This accounting concept is known as Farm or Substance over.

  • Prudence
Here there is need of financial statement preparation with the use of professional help in the adoption of accountancy estimates and policies. It requires that the financial accountants must work out a degree of caution in the acceptance of policies and certain approximation of income and assets.

  • Completeness
Depending on the information present in the financial report is achieved only when complete financial information is presented to the concerned business and other financial decisions making needs of the accountant. 

Consequently, information needs to be complete in all respects without any partial view.


See also:
Accounting Basics
About Accounting
Accounting assumptions and characteristics
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