Accounting can be described as the “language of business.” As we know that human memory is limited and we cannot store endless information. So, accounting takes the charge of maintaining the records of all the transactions that are made within an organization.
Accounting is a process of identifying, recording, summarising, analyzing, and interpreting financial information to the end-users. It conveys the organization or company’s financial position to everyone who wants to know. It helps to convert a company’s activities into concrete reports that can be compared.
All the transactions which hold some monetary value should be recorded in the books of accounting and all the non-monetary transactions like (skill, honesty of an employee) should be ignored.
Example of Monetary transactions include:
- Purchased furniture for cash from a supplier.
- Sales done on a credit basis to a customer.
Accounting is based on the Dual-aspect concept which means for every debit there must be equal and opposite credit. Let’s say you have purchased a machinery for cash. It includes two aspects i.e Receiving goods and giving cash. So, the machinery account will be debited and the cash account will be credited with the same amount.
Accounting shows you whether or not you earn a profit, what the cash flow is, what the present value of the assets and liabilities of your business is, and what aspects of your company actually make money.
Small business accounting records the money transactions that come in and out of your business accounts including sales, purchases, payments, and liabilities. Small business accounting is achieved by tracking all the revenue and expenditures generated by the business and using that data
- Record financial transactions,
- Make financial reports,
- File tax returns.
Accounting allows you to assess the company’s health and value, to make rational decisions about short and long-term progress.
Nowadays, online accounting or e-accounting came into existence. The application of online and Internet technology to the business accounting function is referred to as online accounting. To help you out in conducting your company’s accounting tasks, Online Accounting uses Internet technology such as your web browser and smartphone. It replaces conventional software, spreadsheets, or manually paper-based accounting systems.
Online accounting provides real-time financials. It allows you to see how the company is doing in real-time. You will see how much money you have in bank accounts and cards i.e inflow and outflow of cash. This helps in making decisions easily and to tackle areas that require attention before it is too late.
As it is browser-based, Online Accounting is still up to date. This means that for the next version, there are no payments and all the protection and functionality updates happen behind the scenes automatically.
You can make the best use of online accounting from anywhere, so there’s no need to get back to the office to be more productive.
The more effective and safer way of operating a small business is simply an online accounting.