The comprehensive preparation of records for all financial transactions in a systematic way in a business is known as accounting. Also, it can be the process through which financial transaction records are summarized, analysed as well as made into reports to agencies that oversees activities such as auditing in a business as well as the entities required to collect tax. Each business is required to have an accounting segment which varies depending on the size of the organization where accounts can be handled by accountants and bookkeepers for the small entities and a finance department with a number of employees for large companies. Informed decision can be achieved when the financial reports provided give a true picture of how the business is performing. Individuals that are mandated with accounting activities in a business can do several roles such as bookkeeping and tax preparation.
In bookkeeping, the bookkeepers are required to record transactions that take place in the business such as sales, purchases, receipts or payments that have been made to an individual or another organization. Bookkeeping ensures that all the cash or credit transactions have been recorded in various correct 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. Double-entry bookkeeping method 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.
Another duty in accounting is tax preparation where appropriate tax returns can be filed for the business to the responsible body every year. The tax preparers, certified public accountants, attorneys or even enrolled agents can be hired by the business to carry out the tax preparation process. It is important for every business to file their tax returns every year and the tax prepatation includes activities such as calculation of the total tax amount and filing the tax.
There are certain qualities that show an individual can work well in the accounting section in a business. Since financial information in a business is very important, it needs not to be exposed to unauthorized persons hence the people need to be professional and ethical. 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.