The Role Of Accountants In Any Business Establishment
The role of accountants in any business enterprise is indeed magnanimous
. A business can determine all of its financial standing through the documents that the accountants prepare. Since financial position is very vital to the profitability of any firm, then the choice of the company accountants is crucial decision for management. Accounting is corollary to presenting the different aspects of monetary areas in any company - accounting of cash inflow and cash out flow, accounting of income and expenses. An accounting firm is also tasked to take charge of the company's tax responsibilities.An accounting firm handles all company and corporate financial needs - from business start-up, bookkeeping and preparation of financial reports to payment of corresponding government duties. The business start-up is one aspect that is done one-time. The retainership of accountants is needed to journalize all business activities. Bookkeeping is done daily while the preparation of financial statements is supposedly done annually. However, the financial position and cash flow can be done at the whim of the directors or company management.
Bookkeeping
To start the accounting system of a company, the first thing to do is prepare a company balance sheet stipulating the assets, liabilities and networth/capitalization. Then every day transactions will be recorded; bookkeeping entries will be done. This can be done by a staff of the accounting firm - the so-called bookkeepers. These records will be the basis of the income statement and cash flows, as well as the taxes to be paid. Bookkeeping the records is vital as everything about the financial position is dependent on this. It is required that the financial position is properly balanced.
Balance Sheet
One of the required financial report is the balance sheet. The principle in this is expressed in the equation Assets = Liabilities + Networth/Capital. The debit side will include all the assets of the company. The credit side will reflect all the liabilities such as loans and payables or everything the company owes. The Networth is just the residual after deducting all liabilities from all the assets.
Income Statement
This is the most important financial document as far as management is concerned. This will stipulate the profitability of business operations. This includes the gross income, expenses and net profit. The formula to arrive at the net income is very simple. Take the total receipts then subtract the expenses to get the company income.
Cash Flow
This part of the financial documents reflects the company's liquidity - how much cash is available for disposal. The beginning cash is whatever cash the business has at the start of the accounting period. You add to this beginning cash all the cash receipts, then subtract all the cash disbursements. You will arrive at the ending cash which will then be the beginning cash for the next accounting cycle.
Accounting is a record of all business transactions. This will describe all the operations of a business enterprise. The business has to employ trustworthy accountants who will be able to project all financial standings and profitability.
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