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Ensuring Proper Financial Records

The comprehensive preparation of records for all financial transactions in a systematic way in a business is known as accounting. Since there are agencies that oversee activities such as auditing in a business as well as the entities required to collect tax, accounting may also include activities such as making summaries of the financial transaction reports, analysing them and making reports on all these transactions. Each business is required to have an accounting segment which varies depending on the size of the organization where accounts can be handled by accountants and bookkeepers for the small entities and a finance department with a number of employees for large companies. Informed decision can be achieved when the financial reports provided give a true picture of how the business is performing. The roles carried out in the accounting section includes bookkeeping and tax preparation.

Financial transactions such as sales, purchases, receipts or payments that have been made to an individual or another organization that take place in a business need to be recorded by the bookkeepers at all times. The bookkeepers records all cash and credit transactions in the respective books such as supplier’s ledger, daybook, customer’s ledger and the general ledger. An accountant is able to come up with reports on the financial situation of the business when the bookkeeper’s record have been done properly. There are two common entry systems in bookkeeping which includes single-entry and double-entry bookkeeping system. Single-entry bookkeeping uses only expense and income accounts which can be recorded in the journal for expenses and revenue. In the double-entry bookkeeping system, two entries for accounting are required to make records for the transactions and can occur in the liability, asset, expense, equity or the revenue accounts.

Tax preparation is also a common role carried out in accounting so that the appropriate tax returns can be filed for the business to the responsible body every year. The tax preparers, certified public accountants, attorneys or even enrolled agents can be hired by the business to carry out the tax preparation process. Tax preparation through processes such as calculation of the total tax amount and filing the tax is crucial for a business which ensures that it is compliant to the laws of the region it operates.

Individuals who are mandated with accounting roles need to have certain qualities to ensure that they carry out quality work. Since financial information in a business is very important, it needs not to be exposed to unauthorized persons hence the people need to be professional and ethical. They should also have proper communication skills both written and verbal to ensure that they are clear and understand everything in the field. They also need to have proper customer relations more so those that interact with customers every now and then in the business such as when serving them and addressing issues.

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