ACCOUNTING AND BUSINESS

ACCOUNTING AND BUSINESS

How does the business maintain its financial records? Who does the accounting for the business? What accounting or records is used?

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Businesses are maintained by generating reports about the financial expenses. It is done through the use of accounting knowledge. Accounting is done by internal users like managers, employees, budget officers (Watts and Zimmerman, 1896). Again internal officers and sales staffs also do the accounting. External users like shareholders, lenders and the government among others also do accounting for the business.

The accountings used include; financial accounting such as balances sheet, cash flow statements, and income statements as well as owners’ equity. Also managerial accounting is used to track and report cash flows. Managerial accounting is also used to manage processes such as sales, customer service, manufacturing, research and development as well as employees.

Who periodically reviews and analyzes the accounting records? What reports are generated? How are they used to manage the business?

The business’ owner is the one who reviews and analyzes the records to revise the methods and process to improve or even adjust those methods to increase the returns. The reports generated are the balance sheet and income statements. For instance, the financial statements is used to measure the size of the business, communicate about the business financial information as well as record and analyze business information. The balance sheet helps in listing the liabilities, owners’ equity as well as the business assets by the end of the accounting period.

How well do you understand the financial reports generated by your accounting systems? How well do you utilize the information to make the business decision?

I understand well that the financial reports are used to explain the situation of the business, for instance, the balance sheets of the liabilities for both current and long term should be equal to long term and current assets. This is for explaining whether the business is in a stable situation or not. Financial statement explains the growth rates of the business as well as the size of the business for that reason it deals with the business revenues and expenses. I utilize the information by coming up with a good strategy on how to keep the business running, and be able to rectify a mistake made as well as be able to establish a strong base that can’t be shaken by my competitors. The information is also used to plan on how to expand the business.

What information would you like to obtain from your financial accounting system; beside how much income you are obtaining?

From lenders; I would like to obtain the information about the lending requirements as well as whether my business does qualify. From external auditor; I would like to know whether every cent invested in the business has been accounted for as well as explain whether the investment have real returns. I would also like to know whether my business does comply with the government rules and regulation as well as know whether the customers are satisfied by the product provided to them.

Have you had any formal instruction or training as well as to how to record your business transactions, understand the information and or review and analyze the data?

Yes, I had formal training on how to develop the business plan, balance sheet, income statement among others. That information has been beneficial to me as well as those who would like accountability in their businesses since they do hire me to develop some financial statements like the income statement and the balance sheet. I acquired this information in school as well as through practice.

Is your financial information detailed and organized enough to give adequate management information? How do you utilize this information?

Yes. I utilize it by helping people who do not know how to develop business plans but they have business ideas on how to develop it. I also help them on how to use the business plan to pitch the investors in case they have less capital to start the business. I also analyze the income statements and the balance sheets for people who do not know how to analyze them and then advise them regarding my analysis.

References

Watts, R. L., & Zimmerman, J. L. (1986). Positive accounting theory.