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Accounting definition

Accounting and language


Accounting is defined as a source of computer action, which means setting and checking accounts. The tax is accurate and correct, and the financial statements used in accounting are divided into all financial operations in a specific period and show the financial position of the facility and cash flows.

Accounting bodies provided technical definitions for accounting, for example, defining the US Institute for accredited Accountants (AICPA) that accounting for recording and summarizing the financial transactions or transactions containing at least one financially financial part and recording the results of these operations in an expression.


The importance of accounting in the business world


Accounting is a combination of art and science; It requires creative skills to judge financial results, which requires training in this area so that the profession can perform various professional accounting functions, and requires scientific and knowledge skills but are not accurate because the rules and principles of accounting are changing and constantly evolving to improve private processes In.


Main aspects of accounting


Accounting consists of 3 main aspects as follows:


Record keeping system

This system requires the use of standardized policies and accounting procedures using standardized standard models.


Transaction tracking system

The collection of information on each type of commercial transaction needs a separate procedure. For example, the entity needs different systems to carry out customer requests, invoices issuance, income collection, etc., and the more part-taking track of the accountant.


preparing financial reports

This process is conducted in a specific way according to the generally accepted accounting principles (GAAP) and IFRS, which determines how they should be used to address and assemble trade transactions in the financial statements, the income statement, the balance sheet, and cash flow statements and disclosure data, Which gives the results of the financial period and the financial position of the facility at the end of that period.


Accounting types


Accounting includes many types related to various financial and commercial transactions, the most important of which comes from:



  • Financial Accounting: The registration and classification of financial and commercial transactions and the processing of financial statements to be used within and outside the facility. This data is prepared to match the generally accepted accounting principles.
  • Administrative Accounting: Focus on providing information for internal use in the entity, specifically to use decision-makers, therefore focusing on their information more than compliance with generally accepted accounting principles.
  • Tax Accounting: Aims to assist customers to adhere to the applicable tax laws, including tax planning, and tax reduction services in legal ways, and evaluate the results of tax decisions and related matters.
  • Cost accounting: Cost accounting is one of the administrative-accounting departments and indicates the recording, presentation, and analysis of the facility costs, and this type is very important in industrial works that include complex inputs for costs.
  • Accounting: Adopted on one hand to deal with financial accounts, so that this entrepreneurial procedures associated with real estate, credit funds, investments, and others on behalf of their clients and also provide financial information for customers annually; Including a summary of all accounts, receipts, gains, losses, and assets owned by them and which they can act.
  • Criminal Accounting: The establishment of financial information for the facility is reflected in the event of losing some information required for review; To compile and record all documents and register for all credit and cash transactions in the financial statements, often enter this type of accounting on legal issues related to fraud, claims, and conflict.
  • Public Accounting: Accounting consultations provide their clients based on their needs, such as Audits, tax procedures and procedures for using certain technology or computer programs, and legal advice.
  • Government Accounting: Any financial planning and resource allocation for various local or federal government departments and monitoring government budget and working on government accounting standards (GASB).
  • Accounting Information Systems: This type of accounting helps improve accounting procedures, where employees can monitor the production of these procedures during a specific time frame as well as a proposal for updated technology to improve them.
  • Accounting Audit: A branch is one of the branches of public accounting; It consists of an external audit aimed at examining the financial statements by an independent external party to express its opinion on data justice and compliance with generally accepted and internal accounting principles aimed at assessing the adequacy and efficiency of the organizational structure in the control and internal control of the facility.


Accounting principles


The accounting principles are defined as a group of general rules that must be followed when preparing the financial statements distributed to users from outside the facility, including basic principles, guidance, and accounting assumptions:



  • Cost principle. 
  • The principle of conformity. 
  • The principle of full disclosure. 
  • The principle of recognition of revenue. 
  • Physical principles, conservation, consistency, and others. 
  • Regulatory rules for the sector.


Accounting uses



Accounting is used in many areas in the business world and from the most important uses what comes:

  • Payment: Accounting data is used to complete and submit tax calculations. 
  • Loan insurance: Accounting data helps lenders in determining the eligibility of borrowing facilities and their ability to pay. 
  • Achieving the terms of regulatory authorities: Some establishments must provide detailed reports on their financial status for supervisory duties and provide basic accounting data for these reports.
  • Provide financial contributions: The contributors to the facility request detailed financial information based on accounting records for the assessment of the establishment and thus the potential of their investments. 
  • Providing financial capital markets: Capital markets require accurate accounting and financial statements for joint installations in the financial market, affected by shares of these facilities. 
  • Communication with managers: The facilities must announce the financial status of managers through detailed financial statements and reports and accounting for budget assessment and costs; To help them in decision-making, cost planning, and measuring the economic performance of the facility.


The importance of accounting for small businesses


The small business advice attention is seriously accounting for its importance in proper planning and avoiding miscellaneous financial practices, and the most important accounting contributions to the development of small businesses come from:



  • Planning for growth: The financial statements help small businesses to assess the speed and evolution and develop them to adopt easy measures to assess the work, such as sales growth, which do not give full on the financial situation and prepare for growth. 
  • Loan insurance: helps to account for providing and presenting financial and up-to-date data; Which helps them secure loans and grants. 
  • Collect revenue: The presence of a balance of payments from accounting is an effective revenue-tracking process. 
  • Exemption from fines and penalties: The correct accounting provides complete and accurate accounting records, which in turn reduces the risk of violating tax laws and ensures that tax accounts are accurately completed and on time.

Accounting and types can be defined in short as the process of registration of procedures and financial transactions by the commercial facility, through blogging in records, transactions, and reporting, either for administrative, financial, tax, or other, and accounting for important principles; As a cost principle, matching, full disclosure, revenue recognition, highlighting the importance of accounting in small business and large enterprises as they are used to pay taxes, secure loans, and achieve the terms of regulatory authorities, and other uses.

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