Who is an Accountant?

An accountant is a professional who is skilled in performing accounting tasks such as recording business transactions, preparing financial statements, and issuing invoices to clients. An accountant works under the supervision of a CPA (certified public accountant), chartered accountant, or other management accountant.

What Accounting Terms you should know?

Here are some common accounting terms you should know:

  • Cost of Goods Sold (COGS) Refers to the costs used to produce a product. Plays an important role in determining business profits
  • Inventory This includes raw materials in storage, items in the manufacturing process, and finished goods available for sale
  • Assets Assets refer to tangible or intangible assets that help add value to your business. There are current assets and fixed assets. Current assets refer to assets that can be converted into cash within one year, and fixed assets refer to assets that cannot be converted into cash immediately.
  • Accounts Payable Accounts payable refers to money that you owe. Current liabilities and long-term liabilities may exist, where current liabilities are those that are due within one year and long-term liabilities are those that are not due within one year. Equity Refers to the enterprise value after deducting liabilities from assets
  • Revenue refers to the amount of money your business makes through sales

What is working capital?

This refers to the capital used in day-to-day trading. Calculated by subtracting current liabilities from current assets. Working capital helps companies calculate the resources they can rely on to carry out their operations in the short term.

What is the difference between accounts payable and accounts receivable?

Debt refers to the amount a company owes to purchase goods or services on credit from a seller or supplier. it is a responsibility. Accounts receivable refers to amounts owed by a company in connection with a credit sale of goods or services. Act as a company asset.

Are inactive and dormant accounts the same?

An inactive account is an account that has been closed and can no longer be used. A dormant account is an account that is not currently in operation but can be used in the future.

What do you mean by executive accounting?

Executive Accounting is aimed at service-oriented companies. It is relevant to the finance, advertising and PR industries.

Which is better cash basis accounting or accrual accounting?

If you want to keep your account efficient, you can use cash-based accounting or accrual-based accounting. Cash basis accounting is a simple accounting system compared to accrual basis accounting. Cash accounting requires that transactions are recorded only when payments are actually made or received. Accrual accounting, on the other hand, requires you to record every transaction that occurs, even if no money is actually received or paid. Double-entry bookkeeping requires you to make two entries for each transaction. Choose accrual accounting if you want to provide credit to your customers.

Anyway, you can choose the method that suits you, but the government mandates some businesses to choose accrual accounting. If your total annual sales exceed his $5 million or your gross income from inventory sales exceeds $1 million, you should opt for accrual accounting. If your business structure is C Corporation, you must use accrual accounting.

What is the Role of an Accountant?

Accountants have many duties and responsibilities. Let’s see:

  • Accountants are responsible for financial accounting and reporting
  • He is responsible for the revision process
  • He helps me prepare tax documents.
  • He provides management services and consulting
  • Accountants are responsible for financial analysis
  • He plays an important role in cash management

What are the Different Types of Accounting?

There are various types of accounting. Let’s see:

  • Financial Accounting In this type of accounting, accountants create reports based on business her transactions that have occurred within an organization over a period of time. Financial accounting works in both public and private sectors.
  • Management Accounting This type of accounting focuses on the management side of the business. It is used to forecast and plan the means and resources available to achieve corporate goals. Tax Accounting Tax Accounting refers to the registration and preparation of reports related to the payment of taxes and the submission of tax returns to the Ministry of Finance.
  • Costing Helps you to do a detailed analysis of production, sales and unit costs of the production process.
  • Management Accounting It refers to the process of producing reports related to business operations in order to enable a company to make business decisions quickly. Management accounting helps companies achieve their business goals.

How to maintain accounting accuracy?

There are a few things you can do to help maintain accounting accuracy. Let’s see:

  • To ensure accounting accuracy, you must identify your revenue sources.
  • Need to track invoices and receipts
  • Filing a tax return is a great way to avoid penalties
  • Preparing financial statements is another way to maintain accounting accuracy.
  • You should always pay attention to deductible expenses.

What are the common mistakes that people make in accounting?

There are some mistakes people tend to make in accounting. Let’s see:

  • Mixing company work and personal accounts is the most common mistake people make in accounting.
  • Lack of communication between accountants and companies is another common mistake people make.
  • Lack of backup and misallocation of resources are some of the mistakes to avoid in accounting.
  • Manual billing should be avoided
  • Some people don’t keep their accounts up to date, a mistake to avoid. Some people forget to save receipts, leading to accounting errors. Therefore such practices should be avoided.

What do you mean by offset accounting?

Offsetting refers to the process of canceling reserved transactions with identical and opposite transactions. Create a net balance by reducing the net value of another account.

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