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What is Accounting? – Definition, Uses, Importance, and More

by The Digital Trendz
What is Accounting? – Definition, Uses, Importance, and More


Accounting consists of recording all economic operations.

It is to know everything the company has come from, where it has gone, and how much is left.

And also, We could define the concept of accounting as that science.

To study, measure and analyze all its assets and determine in what state are your economy and finances.

All the economic and financial information of a company must be reflecting truthfully in the financial statements;

In this way, shareholders, investors, creditors, and business owners are allowed appropriate decision-making.

Whether it is a sole proprietorship or a large multinational company, no matter the size of a company.

It is necessary to keep an accounting control of its economic situation.

And also, Through business accounting, we ensure the profitability of the company.

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What are the Uses of Accounting?

It consists of recording all the economic movements of a company to prepare its accounting statements.

These reports contain the information recorded but in an orderly way and with a specific structure.

What they show is a “photograph” of the economic and financial situation of the entity, which has two objectives

Offer an accurate image of the business’s state to people interested in it, both internally and externally.

Such as partners, creditor banks, finance, investors, etc.

And also, Serve as a basis for calculating the corresponding taxes.

Anyone can show that their company is doing very well, but only the financial statements will say if that is true or not.

What is the Importance of Accounting?

The balance sheets, profits, accounting entries, accounting management, deductions, corporation tax, expenses, invoice records.

You start to use them, but you don’t feel safe because you don’t quite understand their meaning.

Many pertain to the tax field, others are general economic terms, and a large part is accounting vocabulary.

And also, it is inevitable.

Accounting is part of the business world, and whether you understand it or not, it will be there.

Also, bookkeeping for businesses is a crucial part of this process, as it involves recording financial transactions accurately and efficiently.

Companies can also evaluate their performance over time and identify areas for improvement.

What is the Program Accounting?

We are in the 21st century, and accounting is carring out with computer program such as ERP accounting software.

It is unthinkable in any other way.

There are two types of accounting programs

    1. The ones you install directly on your computer
    2. Those who are in the cloud.

What are the Advantages of Accounting?

The latter is the most recent.

Accounting programs in the cloud have several advantages over the former to traditional accounting programs.

You only need an internet connection to work from anywhere and with any device.

And also, Cloud technology is much more secure.

You don’t worry about backups, updates, and space problems on your computer.

These programs can automate different types of information like billing, banks, inventory control, payroll, and assets.

What are the Types of Accounting?

Accounting is classify according to the category where it is using

·         Business Accounts

It includes calculations of costs, expenses, income, production for the year, expenses, or extraordinary income.

·         Financial Accounts

It includes the gross export surplus, added value, commercial margin, amortization.

And also, the company’s solvency, financial ratios, production factors, and the operating cycle.

·         Bank Accounts

For the management of different business funds, loans, titles, bonds, different types of currencies.

And also, They also work with econometric models that establish market variables

Therefore, rigorous accounting controls are carrying out to avoid errors.

·         Matrix Accounts

And also, It uses matrices to facilitate more simply in rows and columns of must and have in its books.

·         Cost Accounts

It can be linking to business and financial accounting.

And also, It covers everything internal to the company, materials, salaries, facilities.

And is used to prepare data on production, investment, purchase of goods, depreciation, and provisions year in progress.

How does the Company Work with Accounting?

The first thing to be clear about is the operations that must be recorded and accounted for in  documents.

Such as purchases and expenses, sales and income, acquisitions, salaries, loans, bank and cash movements, etc.

1. Accounting program

To keep all the movements up to date and completely updated, it will be necessary that you get a program.

These have undergone an evolution thanks to the development of new technologies.

And also, Today many companies are betting on programs that are in the cloud.

You only need an Internet connection to work, allowing relocation, and that you can access it from anywhere and at any time.

2. Templates

If we do not have enough budget to use an accounting program.

There is a much cheaper and effective alternative, Excel templates.

And also, You can create a system with Excel simple.

It is advisable to master the Office program and get an appropriate template.

3. Proof of Operations

But, if you want to record an statement, you must have the document that effectively justifies the operation in question.

And also, Even if it is purchasing a pack of folios, we must prove it, no matter how little money it is.

Also read: What is Business Statistics?- Definition, Importance, Tools, and More

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