Accounting begins with gathering information that can be used to create a financial statement that will summarize and interpret all financial transactions, financial events, or processes. Financial statements are a collection of transactions, which include purchases, sales, purchases, receipts, payments, leases, assets and liabilities. The balance sheet is an itemization of the difference between the value of assets and liabilities at the beginning and end of a period. The income statement includes the difference between assets and liabilities at the beginning and end of a period. A profit and loss statement provide a summary of net income from operations and an analysis of the sources of profit.
Accounting systems are developed to allow decision-making on the interpretation of financial statements. It is the process of establishing rules by which the interpretation of financial statements can be made. There are different methods of providing financial statements and it includes bookkeeping, payroll accounting, income taxes, inventory, banking, accounts receivable, accounts payable, cash flow, forecasted revenues, forecasted expenses, and profit and loss. Accounting also includes assessing the current and future cash needs of the company.
In order to operate a business efficiently and meet the financial requirements of investors, businesses should keep track of their financial transactions. A company should develop an efficient accounting system to provide financial reports to investors, managers, and other people who have an interest in the financial aspects of the company.
Companies normally rely on the accounting reports and financial statements provided by their employees, vendors, customers, suppliers, insurance companies, credit companies, banks, government agencies, tax authorities, or the media. These reports are used by people such as auditors, accounting firms, analysts, accountants, financial planners, bankers, bookkeepers, finance managers, investors, government agencies, creditors, stockbrokers, lenders, trustees, tax authorities, stockholders, mortgage brokers, accountants, financial planners, etc. As these reports and financial statements are created and presented to an assortment of people, some may not always agree with others. Each person has his own opinion and interpretation of the financial statement and financial statements. There may be differences in views among them.
When dealing with financial issues and the accounting profession, there is a conflict of interests as well as there is a need to consider the needs of the different parties involved in the transaction. One person’s view may differ from another’s view. For example, the accountant must account for revenue while the financial planner wants to see whether a firm’s stock price is going up or down. It is very important to have a good working relationship with an accountant. It is important to establish a strong working environment between you and your accountant. You will also find it hard to work together as there will be disagreements over matters of interpretation.
Your accountant should explain the implications of every accounting rule to help you determine the best course of action in relation to your company’s needs. It is important to ask questions to clarify certain points in your accounting policy. It is vital to follow through on all instructions given to you by your accountant. Be honest and precise in your requests for clarification. If a discrepancy occurs, the accountant must be willing to give you suggestions and explanations for your situation. When you are satisfied with the explanation and the solution, ask if he/she thinks you have followed the procedures correctly.
An accountant should also be willing to give you examples and explain how they make their calculations and use accounting techniques to arrive at their conclusions. If they are unable to do this, the accountant may be a good accountant, but they may not be a good accountant.