Basic Accounting Principles

The 4 basic accounting principles mentioned below make up the GAAP in the U.S. Almost all businesses record and report their financial earnings and/or losses for the accounting period under the accounting rules. Issued by the Financial Accounting Standards Board, these rules usually are in alignment with other government entities.

Although, accountants are not asked to follow these rules specifically, these rules have to be followed as closely as possible. They help businesses set criteria which need to be met to assure correct accounting activity, comprehensibility and equivalence of the data. We will break the basic accounting concepts and principles in order to understand them properly.

The Cost Principle

Businesses need to register and report all their assets depending on the actual cost received to the businesses, while gaining those assets rather than the free-market rate of the assets themselves. Cost principle is a reliable method to record and report data. Also, it decreases the chance for elements like predetermined market values to step in with the accounting. Although cost principle is looked as irrelevant, since it refers to the actual value of assets.

The Accrual Principle

Businesses need to register and report revenue when it's earned or made and realized or recognized, and definitely not once the cash for the revenue is received. The accrual principle basically shows the work finished by the company/business and not the work that needs to be done for the future.

The Matching Principle

Businesses get to analyze current expenses and revenues. The matching principle shows the market, how well companies/businesses are doing financially and effective they really are. Similar to accrual principle, the expenses in matching principle can only get recorded and reported when revenue is actually earned.

The Disclosure Principle

Businesses have to disclose their records, so that judgment over their financial status can be made accordingly. But revealing the accounting and financial data of the companies/businesses should not make them decrease unjustified expenses or make incorrect notions.

Text 10

ACCOUNTANT JOB DESCRIPTION

Every company has financial transactions that needs to be maintained everyday. Especially, a big organization have to maintain its daily profits and expenditures so that it becomes easier to calculate the overall profit and loss. That is why an accountant is always a must for every company.

Accountant Duties

General and primary accountant responsibilities include, preparing general entries, maintaining balance sheets, ledgers and petty cash accounts on everyday basis. Given below are some of the additional accountant duties that are included in account job descriptions of many companies.

· Maintaining daily accounts.

· Preparing profit and loss statements annually or whenever required.

· Maintaining the document of daily transactions on the computer as well as in hard copy format.

· Preparing financial accounting reports and sending them to concerned authorities.

· Paying attention to taxation issues and preparing taxation reports.

· Dealing with accounting and financial irregularities.

· Analyzing financial information and preparing financial transaction reports.

· Finishing the given tasks within financial deadlines.

· Establishing sound accounting procedures.

· Coordinating implementation of financial rules and regulations.

· Reviewing the budgets of the company allotted to different tasks.

· Explaining staff members, clients, business partners, investors, and associated about the billing invoices and financial and accounting policies of the company.

· Assigning tasks to junior accountants and supervising all the data documentation and complete accounting procedures.

These were some of the accountant duties. Part from this, some accountant job descriptions also include, preparing audit reports or helping the CA with audit reports, developing budgets, financial program planning, an salary recommendations etc.

Qualification Required for Accountancy

The accountant job descriptions of some companies may ask for accounting degree or diploma or commerce background. But some companies give priority to experienced personnel. But if you have both then your chances of getting hired by a good company are maximum. There are different types of accounting careers such as, public accounting, management accounting, government accounting, and auditor accounting etc. Each of the type requires different set of skills. So you must have the relevant qualifications. Apart from this, accounting is also industry specific, such as banking, investment, marketing, etc. so you must have the industry specific qualification, skills, and experience. But some of the common accounting job skills included in all the accountant job descriptions are given below

· An eye for details

· Accuracy and perfection

· Planning and prioritizing, and organizing skills

· Knowledge of economics and accounting process

· Networking and communication skills

· Knowledge of relevant financial policies, laws, rules and regulations

· Knowledge of relevant accounting software

· Problem solving skills

· Ability to handle pressures

· Neat and tidy work practices.

Text 11

TYPES OF ACCOUNTING CAREERS

Any educated individual with an analytical understanding of finances can aspire to be an accountant. Interpersonal skills, ability to communicate and market awareness play a key role in understanding the complex and changing financial environment. Following are the different types of accounting careers:

Financial Accounting

The work of the financial accountant is to make analytical observations that would influence the investment and credit decisions.

Public Accounting

This type of accounting is the most varied type and includes bookkeeping, account management and financial analysis for individuals, private businesses, public firms, government or NGOs, which are based either nationally or internationally. A public accounting business can have one or more accountants and both certified and non-certified accountants can provide public accounting services to their clients. A public accountant can also be involved in external auditing or forensic accounting. Public accounting involves analyzing historical financial data to check for any discrepancies such as money laundering, embezzlement, frauds and any other illegal financial transaction and draw it to the attention of the law enforcement authorities.

Government Accounting

This form of public accounting is specific to government agencies and ensures all revenues and expenditure are in accordance to law. The conventional accounting methods of double entry system in ledgers and journals are used here. Government accounting is differentiated from other types of accounting in respect of providing service that is not profit based but service based. Government accountants are employed by the federal government.

National Income Accounting

This type of accounting is predominantly for the government and is responsible for providing the general public the data with reference to the gross national product about all market-related information, such as the value of the country's goods and services provided and its purchasing power.

Management Accounting

Accountants who specialize in this type of accounting are also known as private, industrial or corporate accountants. Management accountants provide their services to business houses for recording and studying the company's financial data. Their portfolio in the private firms includes cost and asset management, budgeting and performance evaluation.

Fiduciary Accounting

Accounting performed for a trust is called as fiduciary accounting and is done by the administrator, executor or the trustee, who also controls all property subjected to the trust.

Tax Accounting

An accountant who helps either an individual or a firm in filing a income tax return or planning taxes is known as a tax consultant. The tax accountant must be aware of the rules and regulations pertaining to tax policies.

Text 12

BOOKKEEPING: METHODS AND JOB DESCRIPTION

Bookkeeping is a task that relates to creating and maintaining a detailed record of all transactions which finances include. This procedure is to be carried out by all companies, whether a small firm or a large organization. The transactions recorded in bookkeeping usually comprise sales, purchases, due payments, earnings, etc. Some people might think bookkeeping to be the same as accounting. However, both are slightly different in the method of operation. Bookkeeping is a primary task and pertains to taking direct information and details from the transactions conducted. On the other hand, accounting is concerned with referring to bookkeeping records and then preparing reports accordingly. Read on to understand more about the basic concepts of bookkeeping.

Methods of Bookkeeping

Typically, there are two fundamental methods used in the process of bookkeeping: single-entry bookkeeping system and double-entry bookkeeping system.