A Brief Introduction to Accounting
By Sam Kern
Most people who have been appointed to work in an office have come across at some accounting. They are the people who pay and send out the bills that support the company operation. They do a lot more than that, though. Sometimes referred to as "bean counters" they in addition keep their eye on gains, costs and losses. Unless you are running your own business and acting as your own accountant, you would have no way of knowing just how profitable - or not - your business is without some form of accounting.
Accounting covers many aspects, even if your task is to balance a checkbook, that is still accounting. It is part of even a kid's life. Saving a payment, consuming it all at once - these are accounting principles.
Most businesses, if not all, have a well defined accounting procedure and for some, account is a critical part of the business. For example, farmers need to carry out prudent accounting procedures. Many of them manage their farms year to year by taking loans to plant the crops. If it is a good year, a profitable one, then they can pay off their loan; if not, they might have to carry the loan over, and accrue more interest charges.
An important aspect of accounting for owners and executives of a business, is to manage the shifts in assets and liabilities. It is the responsibilities of the owners and managers to keep track of such changes. Making a profit in a business involves a number of factors, not just increasing the amount of cash that flows through a company, but management of other assets as well.
We have some sort of accounting system in our ordinary lives,, not just businesses, although we may not call it accounting per say. Without accounting, peoples' finances can get away from them where they do not know what they have spent, or whether they can anticipate a gain or a loss from their business. Staying on top of accounting, whether it is for a multi-billion dollar business or for a personal checking account is a certain activity on a regular basis if you are smart. Not doing so can mean anything from a bounced check or posting an end to a company's shareholder. Both schemes can be equally devastating.
In summary, accounting can be regarded as information, which is published periodically in business as a profit and loss statement, or an income statement
About the author
Sam Kern has also published a number articles on income tax recurns.
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