Accountancy is the process of recording the transactions into journals, classifying them into ledgers, summarizing them into financial statements and interpreting the results to the stakeholders of the organization.
So, the key points which constitute the accountancy:
· Recording: It refers to the capturing of data from the transactions like issuing invoices to customers, paying supplier invoices, recording all the cash receipts from the customers and paying employees, entering them into journal book.
Classifying: After recording the transactions into the journals, transactions are sent to their respective heads
to ensure that debit side and credit side is posted correctly. Transactions come into the ledger where each
account is prepared separately and the effect of which is shown in Trial Balance. Trial Balance is made just to
match both the side of the debit and credit side.
Summarizing: This is the last step in the accounting part, as all the information which is posted in the ledger and balanced in the trial balance is then summarized into the financial statements. Financial Statement includes a Balance Sheet, Income Statement and Statement of Cash Flows.
� Balance Sheet: It is the statement which shows the company’s financial position that includes assets and liabilities on both the side of its arm. It is made at the end of every accounting period.
� Income Statement: It is the statement which shows the income and expenses related to the operating and non-operating activities during the financial year.
� Statement of Cash Flows: It is the statement which shows the cash inflow and cash outflow and it is made at the end of an accounting period.
All these work related to the accountancy is managed by the accountant.
An accountant is a qualified professional having a specialized skill in performing accounting functions mainly consists of auditing and analysis of financial statements. An accountant must perform its practices according to the guidelines and principles followed in their regions such as IRFS (international financial accounting principles) and GAAP (Generally Accepted Accounting Practices). There are various categories of accountants
which are briefly discussed below:-
Certified public accountant- These are the top level of accountants which are experts in maintaining accounting records, taxes and finances of an organization.
Auditors- These accountants’ deals in the branch of auditings such as inspection of books and accounting system, maintain and organize fiscal
records, assessing the financial operation and provide recommendations for further improvements.
Management accountants- These types of accountants perform duties such as risk management, planning and budgeting, external financial reporting, profitability and much more in order to improve the financial position of an organization and forming strategies.
Cost accountant– Cost accountants analyze the costing activities of an organization such as labor, material, shipping costs, production cost, and
administration cost in order to conduct the profitability analysis of a supply chain network and budget preparation.
Government accountant– these accountants ensure that the funds collected through taxpayers are utilized in a proper way. They also help the government in planning their spending in a fiscal year.
Project accountant– This professional analyze every aspect of the project that may impact the overall cost such as invoices, approval expenses,
planning budgets and ensure that the project meets its deadline.
Investing accountant– These accountants job is to maintain the client’s investments and should possess knowledge related to stocks, bonds, ETF, currencies, and investment vehicles.
Forensic accountant– these accountants examine the financial record for detection of frauds, errors, and omissions.