Accounting or accountancy is an accounting method that evaluates, reports, discloses, or provides assurance concerning the financial activities of a business or organization. The accounting profession usually includes professional practice in tax preparation, corporate financials, budget analysis, corporate control, cost allocation, financial reporting, and audit. Accounting methods are used to obtain information that will support strategic planning, market development and decision making. Auditors are responsible for ensuring that all necessary internal controls are in place to ensure the fair presentation of the accounting information.
Accounting is a part of the wider field of financial accounting, which includes economics of business and taxation. In other words, accountants perform measurement, interpretation, reporting, collection, maintenance, reporting, and protection of financial transactions and information. In order to become an accountant, one must be eligible to take the Certified Public Accountant (CPA) examination. Passing this examination assures potential employers that the individual has the ability to perform the responsibilities of an accountant.
Accountants perform many different tasks throughout the accounting process. They report the financial transactions that occur during the day on a daily basis. They record the financial transactions in a database, create reports based on those records, analyze the information, and provide advice or recommendations to management. Accountants also prepare the financial statements, reports set forth by the company’s CPA and interpret the information contained within the reports to ensure the accuracy of the financial statements.
One key function of accounting is making decisions. In order to make decisions, an accountant considers information from all sources and then makes a decision about what actions are the most appropriate. Key decision-makers within a company make decisions throughout the day to either open a new trade, issue a press release, issue a report, make a business change, issue a grant, enter into a joint venture or make a technical transaction. With the help of an accountant, all these activities are documented in the company’s financial accounting records.
Cost accounting involves the use of data and estimates to make business decisions. When estimating costs, an accountant combines estimates from numerous sources and applies them to the current business situation. This enables the business owners to make informed decisions about their business needs. An accountant then determines the best course of action for fulfilling those needs. Examples of cost accounting activities include developing costs estimate tools, developing an operational costing model, analyzing plant and equipment costs, determining the effect of discontinued operations, estimating labor and payroll costs, developing an operating cash flow analysis, analyzing variable costs, determining whether to retire existing assets, identifying ways to increase revenues, analyzing inventory levels and prices, and more.
The primary role of a bookkeeper is to maintain accurate records of accounting transactions. Bookkeepers also maintain journals of all account transactions, preparing reports for management, examining documents for errors and suspicious activity, and making photocopies of documents for management. Many businesses hire bookkeepers or maintain their own in-house bookkeepers. When a business has its own in-house bookkeeper, the accountants are responsible for maintaining the bookkeeping records. On the other hand, when a business uses outside help for managerial accounting, an accountant serves only as an administrator, responsible for setting up the system and for periodic oversight