What is Accounting? - Meaning and Important Concepts

Accounting in a business is not new to us. Starting from professionals to ordinary people, they must be familiar with the term well. Generally, this term is associated with the count-counting system. Not only that but this is also related to the financial recording process. Of course, accounting is needed by every party, both individuals and especially companies.

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Accounting Function

What is Accounting? - Meaning and Important Concepts

1. Planning tools

One of the functions of accounting is as a planning tool. With financial calculations, every businessman will be more careful in making decisions. Of course, the decision referred to here is related to the company’s finances. So in business, all expenses will be tried so that can be minimized. Business people will plan expenses more precisely for the future. Then the company will avoid losses.

2. Accountability report

Not only as a planning tool but accounting also serves others. It serves as a report of responsibility, especially those related to the company’s finances or finances. The creation of this accountability report should be appropriate. There should not be any miscalculation in this. Until this financial report can be material for the company to carry out its operational activities in the future. So any business activity can later lead the company to huge profits.

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Processes in Accounting

1. Recording

Every calculation and financial record outlined in accounting certainly includes several stages or processes. The initial stage or process in this case is recording. What is noted here is all sorts of financial transactions that have taken place. This recording process requires thoroughness so the accountant must focus on this process. Do not let errors occur in the recording process.

2. Summary

Recording in accounting still has to proceed to the next stage, which is to make a summary. What needs to be understood in this case is that the transaction records that have been made are still considered raw data only. So accountants should group all this data into categories. Then what is recorded and categorized is necessary to translate appropriately.

3. Reporting

The stage of recording and then summarizing financial transactions then still proceeds to the reporting stage. Usually, this reporting process is carried by the accountant to the leadership or owners of businesses and businesses.

This reporting is done at the end of the month so that it can be material for business people to take the next step. However, reports are not always carried out every month. Some reports are carried out each year so that they can be referred to as annual financial statements.

4. Analysis

In the last stage, there is a process of analyzing the financial statements that have been made by the accountant. This analysis is the stage in the accounting process. What is meant by the analysis here is the process of concluding existing financial statements.

This analysis process certainly involves many parties other than accountants. For example, the manager or maybe the director. Because the results of the analysis will affect the decision-making process on something that supports the course of the business.

Accounting Utilization

1. Financial information provider

One of the benefits of accounting is as a provider of financial information. All data recorded in its book is certainly related to all transactions that have occurred. Of course, what is recorded in this book will be important information for the course of the company. Business people and business owners will use these financial records as their financial information so far.

2. Financial evaluation materials

In addition to being information material, the accounting that has been made by the accountant can also be useful as evaluation material. Of course, this transaction record is a financial evaluation material for related companies.

Based on the financial records that have been made, you can estimate future activities. You can eliminate unnecessary transactions and not give a profit. On the contrary, you can still maintain transactions that benefit the company.

3. Financial proof

Every financial transaction that occurs in your business must be recorded. Do not let any transactions be missed so that they are not recorded. This whole record will be financial proof for you. If in the future there are problems related to transactions, then you just have to look back at the accounting book.

4. Economic record keeping

There are other benefits of accounting books that have been made in running a business or business. This benefit is related to economic records which are related to finances. The use of it as an economic registrar is not only related to business. But this is related to individual finances or perhaps also family finances.

The Importance of Accounting

Accounting that is evidence and financial records are very panting. The process contained in this task will help you to know your financial records. In addition, from the results of this written calculation, you can later perform certain actions. Of course, this action is related to your financial matters.

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The existence of accounting knowledge is needed by all parties because it is related to very important things. Especially related to financial matters which certainly require great accuracy. With this calculation, every one of you can control and manage finances well. That is why this cannot be separated from a business and business of any type.