Money Management Accounting System Principles

Companies use varying accounting principles toward money management.

Businesses follow certain accounting principles when managing their money. Accounting principles are guidelines companies follow to ensure accurate and honest financial information reporting. Money management is a vital aspect to a well-run business.

Cash and Accrual

The cash method of accounting recognizes revenues and expenses when cash is exchanged. The accrual method recognizes revenues and expenses on the date they occur.

Periodic and Perpetual

Companies with inventories use periodic or perpetual accounting with a focus on inventory. The periodic method provides a record of on-hand inventories only once a year when an inventory count is conducted. The perpetual method is ongoing, computerized and shows a current inventory at all times.

Budgets

A budget is an important money managing tool for all businesses. Budgets are created and compared year to year. Any variances between budgeted amounts and actual amounts are investigated.

References

• Entrepreneur: Basic Accounting Principles
• Reference for Business: Accounting
• Accounting Coach: Accounting Principles