Accounting Essentials
Accounting is an economic discipline that enables organizations to record operating activities and share with the rest of the world their business performance. Adequate accounting procedures allow top management to ensure that lower-level personnel prepare accurate financial reports. Accounting essentials constitute the conceptual foundation on which accountants and financial analysts rely to report accurate operating data.
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Bookkeeping Fundamental Concepts
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Bookkeepers play an important role in corporate accounting processes. Also known as junior accountants or accountant trainees, they record transactions by debiting and crediting financial accounts, such as equity capital, assets, liabilities, revenues and expenses. A bookkeeper credits an equity, liability or revenue account to increase its balance and debits it to decrease the account's amount. The opposite holds true for an asset or expense account.
The accounting concepts of "credit" and "debit" differ from the banking terminology. In accounting, debiting an asset---such as cash---increases its amount. On the contrary, a bank debit notice to a customer indicates a decrease in client funds.
Inventory Management
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Inventory management is at the heart of a successful corporate accounting policy initiative. Inventories often constitute the biggest asset group for companies, second only to long-term assets such as plants and real estate, according to Southern Utah University. Administering corporate inventories entails training warehouse supervisors adeptly. It also requires the implementation of tools such as inventory management software and enterprise resource planning applications.
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General and Subsidiary Ledgers
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A bookkeeper records operating activities in general and subsidiary ledgers. A general ledger is a two-sided accounting form displaying one column for debits and another column for credits. A general ledger may have multiple subsidiary ledgers. For example, a company's accounts payable general ledger shows three subsidiary ledgers related to Vendor A, Vendor B and Vendor C.
Financial Reporting Essentials
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A financial report provides the "finishing touch" that shows the dexterity of corporate management in presenting a company's operating results. To be accurate, a firm's accounting statements must conform to generally accepted accounting principles and international financial reporting standards. A complete set of financial data summaries includes a balance sheet, a statement of profit and loss, a statement of cash flows and a statement of retained earnings.
Internal Controls
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Internal controls are integral in corporate accounting processes. In fact, the controls ensure that personnel abide by regulatory guidelines when assuming their responsibilities. A control is a group of instructions that a department head, or a segment chief, puts into place to prevent fraud, technological malfunctions and error. An accounting control also helps avert negative regulatory initiatives, such as fines and government-led litigation.
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References
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