Defining accountability and accounting Accounting and Accountability


Is a legal business structure consisting of an association of two or more people who contribute money, property, or services to operate as co-owners of a business. Benefits of this type of structure include favourable tax treatment, ease of formation of the business, and better access to capital and expertise. The balance sheet gives you a clear picture on the financial position of your business on a particular date. In addition to being relevant and reliable, accounting information should be comparable and consistent. Comparability refers to the ability to make relevant comparisons between two or more companies in the same industry at a point in time. Consistency refers to the ability to make relevant comparisons within the same company over a period of time.


Collect transaction information such as invoices, bank statements, receipts, payment requests, uncashed checks, credit card statements, or other mediums that may contain business transactions. Regardless of the size of a business, accounting is a necessary function for decision making, cost planning, and measurement of economic performance. Are followed consistently to achieve the intention of comparing the financial statements of various periods or for that matter of multiple entities. States that the entity needs to prepare and maintain its book of accounts on a prudent basis. Conservatism says that the entity has to provide for any expected losses or expenses; however, it does not recognize future revenue expected. The Realizable ValueRealizable value is the net consideration from sales proceeds of any assets in the normal course of business after deduction of incidental expenses. It is common for the valuation of inventories under International Financial Reporting Standards and other accepted accounting policies.

Types of business structures

Leverage ratios measure total debt versus total and gauge equity. The CPA exam is tough, but having this certification is one of the most important tools for progressing in an accounting career.

  • Although accounting and accountancy are often used interchangeably, each term has its own unique definition and practical uses.
  • There are forensic accountants who are checking books every day to find the problems in a system, and there are tax accountants who are checking the balance between tax payments and what a company owes.
  • On a cash basis, you only record transactions when money changes hands.
  • Consistency refers to the ability to make relevant comparisons within the same company over a period of time.
  • IFRS , are standards that are widely adopted in financial accounting.

When cash is received for the sale of goods or services, a deposit is made, no matter when the sale was made. In this method, Revenues or sales are recorded when they are actually received and vice this method, entry of receivables are not made. B) Artificial or legal persons Account- An account recording financial transactions with an artificial person created by law or otherwise is called as an artificial person Account. Accounts recording transactions with a person or group of persons are known as personal accounts. Accounting professionals like CPAs or tax advisors can also provide you with knowledge and insight that are simply inaccessible to non-accountants. These experts can offer guidance on tax deductions you didn’t know you qualified for, tax rules you didn’t know you were breaking, and best practices picked up while working for other companies in your industry. A skilled CPA will save you time by communicating your company’s financial state to you in clear language, while anticipating your financial needs.

Types of Accounts

Fortunately, you can mitigate these challenges by automating your finances with a cloud accounting software like Sage Business Cloud Accounting. However, as your finances become more complex, you’ll quickly discover spreadsheets don’t grow well with your business. In a spreadsheet every financial transaction must be updated manually. This not only takes up time, it also increase the likelihood of data errors. Cost accounting seeks to determine the cost of units produced and sold or the services rendered by the business unit with a view to control cost and increasing the profitability and efficiency of an entity. Communication is quick and reliable—the Bench platform allows you to send messages straight to your bookkeeper or set up a call to go over any financial questions that might come up. Our premium package even includes tax filing, which makes all accounting tasks completely automated.

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In other words, accountancy deals with the conceptual, and accounting deals with the practical. The term “accountancy” refers to the study, principles and theory of accounting, while the term “accounting” is commonly used for all accounting practices and procedures in application.

financial health

It is very hard to be an executive without accounting,” notes Siciliano. The chief financial officer is the top-ranked person regarding a company’s finances, so they oversee finances for the entire organization and help other executives make decisions. It’s also worth noting that while all CPAs are accountants, not all accountants are CPAs. Tax professionals include CPAs, attorneys, accountants, brokers, financial planners and more.

Cloud software = real-time data with anywhere, anytime access

The analyst will review the‘s balance sheet, income statement, and cash flow statement from multiple reporting periods. The aim is to determine trends and patterns from which a financial decision can be made. It’s common for an analyst to review the most recent 10-K and the previous three 10-Q statements, each of which contain the three key financial reports as well as other information. Accounts Receivable AR is a part of accounting and bookkeeping that records the all the monies due the company. These items are recorded on a company’s balance sheet but are neither a part of the income statement nor the cash flow statement. AR represents funds not yet realized from contracts that extend credit to a customer.

  • The system of record keeping for accounting requires the use of a standard set of accounting policies and procedures, as well as standardized forms.
  • Although some of the information comes from recorded transactions, many of the analyses and reports include estimated and projected amounts based on various assumptions.
  • Management accounting focuses on the measurement, analysis and reporting of information that can help managers in making decisions to fulfill the goals of an organization.
  • This information is now ready to be turned into financial statements.
  • In either case, a thorough accounting helps executives and analysts better understand the company.

It requires rigorous analytical thinking, top mathematical abilities, and a meticulous attention to detail. If you are up to the task, accountants receive handsome compensation packages. At the lower end, bookkeepers and other accounting clerks are said to receive a median salary of $40,240, but the Bureau of Labor Statistics shows that growth in that field is nominal through 2026. Professional accountants take on jobs such as Controller, Financial Analyst, Tax Accountant, Risk Manager, and Forensic Accountant. The very top of the field, the Certified Public Accountant is considered one of the most well-prepared professionals in accounting.