Accounting and Finance


Accounting and finance

This training will equip you with various accounting and finance techniques. Accounting is the process of recording the financial transactions of a business. Your employees will learn about the accounting process and different types of accounting. The accounting process includes summarizing, analyzing, and also reporting these transactions. Your organization will report to oversight agencies, regulators, and also tax collection entities. Financial statements essential in accounting are a clear summary of financial transactions. They summarize a company’s operations and also the cash flows of an accounting period.

Types of Accounting

Accountants can record specific transactions or work with specific sets of information. For this reason, there are also several broad groups that most accountants. These are;

Managerial Accounting

Managerial accounting uses much of the same data as financial accounting. It also organizes and utilizes information in varying ways. An accountant generates monthly or quarterly reports that a business’s management team. The reports can be used to make decisions about how the business operates.
Managerial accounting encompasses many facets of accounting, including budgeting and also financial analysis tools. Information that may be useful to management falls under this umbrella.

Financial Accounting

It is the process used to generate interim and annual financial statements. Results of all financial transactions that occur during an accounting period are summarized. The summaries are in the balance sheet, income statement, and also cash flow statement. Financial statements of most companies are essential yearly by an external CPA firm. Audits are sometimes a legal need or can be part of a firm’s debt covenant.

Cost Accounting

This helps businesses make decisions about costs. Cost accounting considers all of the costs related to producing a product. Analysts and also business owners use this information to determine the cost of a product. In cost accounting, money is cast as an economic factor in production. Money is a measure of a company’s economic performance in financial accounting.

Tax Accounting

Tax accountants often use a different set of rules to report the financial position of a company. These rules are set at the federal, state, or local level based on what return is being filed. Tax accountants cut a company’s tax liability through thoughtful strategic decision-making. A tax accountant often oversees the entire tax process of a company. Tax processes entail the creation of an organization chart, reporting, and also remittance of tax liability.

The Accounting Cycle

Financial accountants operate in a cyclical environment with the same steps. The accounting cycle involves taking raw transaction information and entering it into an accounting system. It also entails running relevant and accurate financial reports. The steps of the accounting cycle are:
1. Collect transaction information such as bank statements, receipts, payment requests, and also uncashed checks. One can also collect credit statements or other documents that contain business transactions.
2. Prepare the financial statements to summarize all transactions for a given reporting period.
3. Post journal entries to the general ledger for the items in Step 1. You do this while reconciling to external documents whenever possible.
4. Post-adjusting journal entries at the end of the period to reflect any changes to be made to the trial balance.
5. Prepare the adjusted trial balance to ensure these financial balances are correct.

Importance of Accounting

Understanding your business

The first reason why accounting is essential is to understand your own business. It is impossible to run a business without keeping track of all your expenses and also revenue. As a business, you need to look at the whole picture; income and also expenses are a small part of the entire picture.

It is required by law

It is a legal rule for businesses to keep records of their accounts. You need to submit year-end accounts to either company’s house or HMRC. Documents also need to be kept for at least six years.

It helps decision making

Every business has to decide how they run it, how much stock to keep, and also if changes are required. Looking at the accounting figures will help make these decisions.

Produces the reports for year-end

It doesn’t matter if you are also a large limited company or self-employed. Year-end submissions to Companies House and HMRC are required. The least reports required are the Balance sheet and also Profit and Loss.

It is essential for investments, loans, and the sale of the business

If you need a business loan or investment, they will look at your accounts to decide if it is a good investment. The significance of the investment will depend on how much information is required. Complete due diligence may also be essential. Measures business performance. There are lots of accounting ratios to help measure business performance. We also have a list with ratio calculators.

Accounting keeps the business organized

Without accounting procedures in place, you wouldn’t know how much money a business has. It is good practice to complete accounting on a regular basis and also have up-to-date reports.

Accounting is necessary to collect payments

A company may agree to extend credit to its customers. Instead of collecting cash at the time of an agreement, it may give a customer trade credit terms

Responsibilities of an Accountant
  • Help businesses maintain accurate and also timely records of their finances.
  • Maintain records of a company’s daily transactions
  • Compile transactions into the balance sheet, income statement, and also a statement of cash flows.
  • Perform periodic audits or prepare ad-hoc management reports.
Skills required for accounting
  • Be able to diagnose and also correct subtle errors or discrepancies in a company’s accounts.
  • The ability to think in a logical manner is also essential; it helps with problem-solving.
  • Mathematical skills are also helpful but are less important than in previous generations. This is due to the wide availability of computers and calculators.

Corporate Finance:

Corporate finance includes the financial activities of running a corporation. It is a department or division which oversees the financial functions of a company. The primary concern of corporate finance is the maximization of shareholder value. The achievement through short-term and also long-term financial planning and different strategies’ implementation.

Public Finance:

Public finance deals with the study of the state’s expenditure and income. It only considers the government’s finances, the fund’s collection, and also its allocation. The allocations are given to different sectors of the economy considered as essential functions.

i)Public Revenues:

Public revenues entail all receipts and income irrespective of their nature and source. The government acquires public revenue during any given period. It will also include the loans raised by the government. Public revenues also include income from taxes, prices, fees, penalties, fines, gifts, and others.

ii)Public Expenditure:

Public expenditure means the expenses incurred by the government. It is the expenditure for the maintenance and preservation of the economy and the nation.

iii)Public Debt:

This means the loans raised which is a source of public finance. Public debt carries with it a repayment obligation to the individuals and the interest.

Private Finance:

Private finance helps a company raise funds to avoid monetary problems. This method helps a company that is not listed on a securities exchange. A private financial plan can also be suitable for a nonprofit organization.