Accounting is the science of dealing with financial transactions and information. It deals with the recording of financial transactions in a detailed manner and makes periodic reports to the concerned authority on such basis. In general the accounting profession includes the study of bookkeeping. The process of accounting involves the collection of data by the various techniques such as manual recording, computerized recording in the latest applications, balance sheet, profit and loss account, and a statement of accounting. This helps to make a transparent presentation of financial transactions, trends, and operations in the market.
A person who is interested in entering the field of accounting should have a bachelor’s degree in accounting or any other qualified accounting program as per the regulations laid down by the state board. Most accounting colleges provide a short-term associate degree in accountancy, which can be completed in two years. Courses for these courses include basic accounting, Auditing and Attestation, Financial Accounting and Reporting, Principles and Practices of International Business, and Applied Business Law. One has to complete a minimum of five years of graduate work in any university to get an accountant degree.
Basic accounting refers to the process of maintaining financial records of a company. Details regarding transactions made in the company are recorded in the books of accounts and include income and expenses, assets, liabilities, ownership interest, and capitalization. Financial accounting includes a number of activities such as cash collections, disbursements, assets, liabilities, and ownership interest of the company. The main purpose of preparing the financial statements of a company is to give an accurate picture about the net worth and assets of the organization.
There are three types of methods used to prepare the financial reports such as the single-entry bookkeeping system, double-entry bookkeeping system, and the use of the mixed method. Single entry bookkeeping system uses the date of each transaction and provides information on the assets and liabilities of a company. Double-entry bookkeeping system uses information from the date of last entry and a balance sheet to determine the income and expenses of a company. The mixed system uses information provided by the balance sheet as well as information from other sources to determine the net income and balance sheet of a company. Some accountants use the single-entry and double-entry accounting methods, while others use the mixed method.
A bookkeeper is an accountant’s personal assistant that prepares the daily accounting records. A typical bookkeeper’s duties include providing accounting services to the company by using computerized equipment and software, performing clerical duties, preparing reports, answering phone calls, and entering data on various forms. Bookkeepers are required to meet certain qualifications such as a high school diploma or GED, as well as a professional certification issued by a professional organization such as the American Institute of Certified Public Accountants.
Another type of accounting is the double-entry accounting, also known as cash-basis and credit-based accounting. Double-entry accounting uses information from the balance sheet and other accounting documents to generate entries for daily transactions. The primary difference between double-entry accounting and single-entry accounting is that a company must use more than one account in order to keep good records. The main advantage of double-entry accounting is that it is less prone to fraud than single-entry accounting.