Commercial company accounting This is a category that may not seem complicated at first glance, but if we look more closely, we will see that it includes different sub-categories, terms and specializations without which it is not possible to understand the work process of accountants. The subject of your article is beginner accounting training. If you are interested in accounting or need more information about this for your business, stay tuned. In this article, we will introduce you to the important concepts and terms of accounting.
Beginner accounting training; Scope of duties: clerk, accountant and supervisor | Beginner accounting training; Accounting without a computer program | Basic concepts related to profit and loss statement; Revenue, expenses and cost
The role and importance of bookkeeping activities in determining the company’s accounting system
The first important and necessary term in the category of beginner accounting training is bookkeeping.
The basis for determining the accounting system of a commercial company depends on its bookkeeping activities. The company clerk is responsible for registering and classifying the company’s financial transactions; Must also be familiar with the methods of recording and classifying this information.
How to handle accounting systems in different businesses
Another important topic related to beginner accounting training is the type of needs of different businesses.
If you have a small business, you either have to design the company’s accounting system yourself or hire someone for it. If you are self-employed and your business is one-person, you will do the accounting yourself. If you have hired employees and expect a significant expansion of your business in the future, you may need the services of a controller (senior accountant) to manage the company’s finances and accounting. But on the other hand, if the expansion of your business in the future is not significant, the use of the services of an accountant or clerk is sufficient to handle the company’s accounting system.
Beginner accounting training; Scope of duties of clerk, accountant and supervisor and the differences between them
We mentioned earlier that the clerk of a trading company records and classifies financial transactions. The duties of an accountant are limited to these and do not go beyond that, while the duties of an accountant are broader and he will be responsible for taking the next steps. Analyzing financial information, reviewing it, reporting and interpreting this information are all within the scope of the accountant’s activities and duties.
Next, we come to the observer who is at the top of this list. The supervisor is, in fact, the chief accountant of the trading company. Launching the company’s accounting system and ensuring that financial needs are met and Company accounting Thereby, the two main functions are supervisory. Such a person is also responsible for the financial and managerial accounting of the company; In other words, he has a duty to react appropriately to the company’s accounting information. Typically, there are larger and more developed companies that need oversight services.
Beginner accounting training; Accounting without a computer program
In this part of the article and in the continuation of beginner accounting training, we will introduce you to accounting without the need for a computer program. But with all the accounting software available, what is the need for such information? Are you familiar with the term in computer science that says: “Waste input, waste output»? This term means that if the data entered into the system (input) is invalid, the output will also be invalid; Therefore, you need to be familiar with the basics of accounting, which determine how much information enters a computer program; Only then will you be able to enter the correct information, and that is exactly the purpose of explaining accounting without the need for a computer.
In the following, in four separate sections, we will provide you with the necessary information about this.
1. One-way or two-way accounting; Which is better to use?
One-way accounting is very similar to recording current account financial transaction information. In one-way accounting, as you pay the bills and deposit money into the company’s bank account (s), you record the information associated with them. Such an approach will only meet your needs if you own a small business with a limited number of financial transactions.
If you have a bigger and wider business, it is better to think about starting a double accounting system. In this method, the information of each transaction is recorded at least twice: once in the debtor account and once in the creditor account.
۲. Cash or accrual accounting; Which is better to use?
Deciding to choose between cash accounting or accrual accounting is one of the first things you need to clarify before setting up and determining your accounting system. If you have a small business or you provide services on your own from your rental home or office, cash accounting will meet your needs. In this method, transaction information is recorded when cash is received; Of course, cash does not mean just coins and banknotes, but also includes electronic payments. Some businesses use cash accounting early in their careers and gradually replace it with accrual accounting.
On the other hand, if you want to serve your customers on credit or if you want to get the goods you need in the same way or on credit from the manufacturers, you have to use accrual accounting. In accrual accounting, transaction information is recorded immediately after the purchase or sale, even if no cash is available and a future payment date is set: similar to that in accounts payable (account payable) or We see accounts receivable.
3. Basic concepts: assets, liabilities and equity
There is another important topic in beginner accounting training that you should be aware of before setting up and determining your accounting system: Basic information about company accounts. This information includes assets, liabilities and equity. Assets are anything that a company owns, including inventory of goods and accounts receivable, as mentioned earlier. Debts that do not need to be described include accounts payable, bank and commercial loans, mortgages, and any other debt recorded in the financial books. Equivalent value is the ownership of the franchisee of the company and other investors.
Beginner accounting training; Balancing accounts and books
in order to Align offices You need to carefully monitor the status of the items listed (assets, liabilities and equity). You also need to make sure that all transactions related to these items are properly recorded in the right place. There is a key formula in beginner accounting training that will help you in this (aligning the books). This formula is known as the accounting equation:
The accounting equation shows that everything the company has (assets) is balanced against receivables (liabilities and equity). Debts include claims of sellers and lenders. Equivalent is the demand of the owner / owners of the company or business.
A closer look at the terms related to the accounting equation
In the following, we will take a closer look at the terms assets, liabilities and equity to get a better understanding of the concept of each and what they include.
If you look at the balance sheet format, you will see the statements of assets, liabilities and equity. The asset statement usually starts with cash and securities reports. In the following list, you will see inventory reports, accounts receivable and fixed assets (land, house, machinery, equipment, etc.). These are tangible assets, meaning they can be seen and touched. Businesses also have intangible assets, such as customer goodwill (trust and loyalty to the brand and business).
Debt reports included in the balance sheet include current liabilities and long-term liabilities. The first usually involves accounts payable and accruals. Accounts payable are the company’s debt to products (suppliers of goods or services) and other debts related to bank loans or credit cards. Accruals include taxes that the company is required to pay, including income tax, sales tax, employee payroll tax, and so on.
Exclusive value includes reports of all claims of company owners. The original owner of the company has provided the required capital in order to set it up, and the special value may include only his claim; But if the company has attracted other investors, their claims will be added to these reports.
4. Basic concepts related to profit and loss statement; Revenue, expenses and cost
Profit and loss statement is the last topic related to beginner accounting training that we will explain in this article. Items that this statement includes include revenue, cost, and expenses.
Revenue is the company’s revenue from the sale of products or the supply of services.
The cost or cost of goods sold includes all costs incurred by the Company to purchase or manufacture goods or to provide services to its customers. The report of purchased goods will be recorded in the purchase invoice.
Expenses are all the expenses of a company that are needed to sustain a business (not just expenses related to the provision of goods or services). The salaries and wages paid to employees are an example of this.
In this article, we have tried to provide you with as brief and useful information as possible about beginner accounting training. The terms and concepts we have described will pave the way for you to enter into more specialized and complex accounting topics. Do not forget that familiarity with the basic concepts does not mean full ability to perform and handle your company’s accounting and auditing work, but better Get help from a specialist or financial advisor. If you want to know more about this, share your topics with us in the comments section.