What Exactly Is Accounting Anyhow? | Business and Finance

Anyone who has worked in an office at any point in their career has had to pay a visit to the accounting department. They are the people who pay and send out the invoices that keep the company running. They do more than that, however. Frequently referred to as ?bean counters,? accountants keep their eyes on profits, expenses and losses. Unless you are running your own small business and acting as your own accountancy firm, you would have no way of understanding just how successful ? or not ? your company is without some kind of accounting.

No matter what business you are in, even if the only thing you ever do is balance your checkbook, that?s still accounting. It?s even part of a child?s life. Saving an allowance, spending it all at once ? these are accounting principles.

What are some other businesses where accounting is critical? Well, farmers have to adhere to careful accounting methods. Many of them run their farms from year to year by taking out loans to plant the crops. If it is a decent year, a profitable one, then they can pay off their loans; if not, they might have to carry them over to the next year and accumulate more interest fees.

Every organization and every individual needs to have some sort of accounting process. Otherwise, their finances can get away from them, and they won?t know how much money they?ve spent or whether to anticipate a profit or loss from their organization. Keeping on top of the accounting procedures, whether it?s for a multi-million dollar organization or for a personal checking account, is a necessary activity. You will keep up with your bank accounts on a daily basis if you?re wise. Not doing so can mean anything from a returned check to posting a loss to a business?s shareholders. Either situation can be equally disastrous.

Accounting is essentially information in the form of numbers, and this information is published routinely in business as a profit and loss statement.

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