For a lot of people, they don’t know what is accounting, accounting is nothing more than just a subject that they could’ve chosen as their go-to in college or university.
If you have not gone much further than that looking into accounting, of course, you won’t know much more about it. Now for those that are looking to enter into the world of accounting here are a few things you should know about accounting as a subject and as professional genera.
What Is Accounting?
Now if we dive into the accurate definition we get; a practice and or a body of knowledge concerned with methods of recording transitions, keeping track of commercial recordings, internal audits and advising on taxation matters of the sort. Which is a little hard to understand for anyone that is not familiar with the accounting lingo. So in English, we can say that; the processor work of keeping financial accounts.
There that is much better, isn’t it?
Accounting principles are general rules that act as guidelines for companies, made by them, which are used by the people in charge of reporting accounts and other financial data.
As mentioned before there are no universal standards for said principles so we can’t list them all here. If you would like to know more about some of the more common ones we can go on depth on them in another article.
For the people that are affiliated with art, they also know such equations as balance sheet equations. From that fact you should be able to guess where such calculations come in handy.
Usually, such formulas are used to determine the relationship between a company’s assets, liabilities and the equity of the owners of any given business. Such an equation will be quite the prevailing aspect of your career if you are an accountant.
You will find that there are set terms used in the accounting industry used for describing certain aspects of any business. The top of such accounting terms you might have heard are;
- Accounts Receivable
- Balance Sheet.
- Assets and more.
Just like any other discipline accounting and finance has set definitions for the phenomenon that accrue on a regular. Click here if you want to know the explanations of such terms.
Firstly all accounting is when it comes to a basic definition, managing debts, and credits. Now, according to accounting 101;
For example, if you are looking are debts that are around a thousand dollars that means you must have the same amount of credit. There are two kinds of debts, one being “Assets” and the other “Expenses.” Are we getting all that? Good!
Credits are divided into three categories; “Liabilities,” “Equity” and “Revenue.” These are a few accounting terms that you will hear a lot.
- Assets; things you own.
- Liabilities; stuff that you owe.
- Equity; your shares in the business.
- Revenue; your income.
- Expenses; bills and payments.
Next up on the list is a classification of accounts. Every account that is out there falls into five categories. Such a list is called the “Chart of Accounts.”
Now we have not discussed a number of things that a lot of people that are aware of the accounting genera will tell you. However, this was just a basic introduction so we will not go into more details here.
Keeping it short and straightforward an accounting ledger or a general ledger account is a record that is used to keep track of balance sheets and income statements trades. Such a ledger contains information on assets such as;
- Accounts payable.
- Customer Deposits.
- Service Fee Revenues.
And things along that line.
Double Entry Accounting:
One of the more fundamental concepts in accounting is double entry. Underlying current book-keeping and accounting. This idea states that every financial transaction has equal and opposite effects in two different accounts at the least. Satisfying the following equation;
Assets = Liabilities + Equity.
Since we are just trying to give you the basics of all such things relating to accounting we are going to try not to confuse you with in-depth characterizations. Forensic accounting is the act of inquiry of potential embezzlement within a company. Alternatively, you can say that it is analyzing financial data for the use of legal records.
Recording revenue and expenses when they took place are known as accrual accounting. We understand that it is a short explanation, however, for this stage, we believe that it is enough for you to get the fundamentals.
Also known as cost accounting, managerial accounting is when you take on the task to identify, analyze and connect information vital to your company’s end goals to your managers.
A piece of information we are sure that you all are dying to get their hands on. People see accounting as one of the better-paying jobs on the market, and with around 70 thousand dollars average, you can be sure that accounting is a field that will offer you a profit.
When you record all the costs of your business such that you can improve your overall management for the future than what you are doing now is called cost accounting.
Putting it in basic terms, the accounting cycle is a process that identifies, examines and records the accounting events of a firm. Now as you can tell, there must be quite some explicit details to this cycle, but those are for another article when you are no longer at a beginner level at accounting.
When you say that industry has goodwill what that means is that said company acquired another corporation for more than the market value.
Cash Basis Accounting:
When you are recording accounting transactions for income and costs when the corresponding money is received, or outflows are made that format of recording is called cash basis.
If you are planning to apply as an accounting, then you will need to have a look at some sample resume.Here are a few that you might find useful, just make sure to use these are stepping stones and not copy paste the whole thing.
Finance Vs. Accounting:
Many people would think that both the terms are one in the same. We’ve seen many people use these two words as synonyms time and time again. However, when it comes to the professional circle, the two terms have quite the different meaning.
We have already covered what it means to be an accountant. So, let’s see how going into the field of finance differs precisely. Where an accounting was the management of credits, finance is a vast array of jobs that require management money. These jobs range from Investment Bankers to Financial Analyst. Usually such people in establishments such as Government Agencies, Banks, Investment Firms, and Suppliers, etc.
Now that you understand the difference a bit better we hope that you find the right path that you want to follow as your professional career. This has just been a quick overlook into the world of accounting. For anyone that seeks a more in-depth look into things, we will be happy to provide you with the more details on any of the topics as mentioned earlier.