When it comes to accounting, there is a lot to know. Terms like accounts payable, balance sheet or transportation tax can be confusing. Fortunately, accounting firms can be hired to help with your business’s finances.
But what is accounting and why is it used? keep reading to find out.
Let’s start with what accounting is. Accounting is a useful way of recording and summarizing financial information. Accounting is used to keep financial information organized which helps businesses in making sense of their financial data, and also keeps them compliant with financial regulations.
Accounting has two parts, bookkeeping, and analysis, but bookkeeping is the backbone of accounting. Bookkeeping is the process of recording and summarizing financial information. This involves recording transactions, summarizing financial information, and preparing financial statements. Bookkeeping will tell you things like how profitable your business is, how much your customers owe, and even how much tax needs to be paid.
Analysis, also called management accounting provides info for decision making, planning, and control of the business. For example, information relating to investment decisions, budgeting, and performance measurement.
To learn more about accounting and why it is used, watch the video above!