The main functions of bookkeeping are accounting and financial reporting for managers and investors. However, the accounting department of the business is generally responsible for payroll accounting, cash inflow, cash payments, purchases and stockpiling, and accountancy of real estate. If these features are not met efficiently and the business will not survive in time
Many of these features and accounting are focused on business transactions. These are economic exchanges between business and business or business. The purpose of accounting is to understand how these transactions are accounted for. Most businesses carry out economic exchanges with six economic groups:
1) Customers who purchase products and services,
2) Employees who are paid wages and salaries and who are engaged in business,
3) Suppliers and distributors selling the business,
4) Debt resources of the capital, who give money to the business,
5) equity capital resources that invest in the business and expect a profit on invested capital and
6) a government collecting various taxes
There are other events that have an economic impact on business that should be noted, such as litigation, no flood or other losses, and other unplanned circumstances and Events
The first major function of accounting keeps track of all the above-mentioned economic exchanges and reports the second. Accountants prepare financial statements for businesses to report to executives and investors The three most important financial statements are the statement of financial position or balance sheet, profit and loss statement and cash flow statement. Everyone needs to understand and know how to repeat these three statements.
In the statement of financial position or financial position, it summarizes the assets owned by one company and the assets of its assets. Sources of assets are divided into two basic categories: liabilities and equity. Some assets come from cash inflows or purchases that have not yet been paid. These are obligations. The remaining assets originate from the owners' capital, which consists of the money invested by the owners in the enterprise and the proceeds of the acquisition and retention of the business. It's important to note that the balance is like a snapshot, and it only shows how much your business is on the balance sheet date.
Usually you see these scales:
Basic balance sheet  List of obligations list
Total assets = Total liabilities + equity
You will sometimes see ownership rights that you call net worth. This is calculated as follows: Assets – liabilities = net value. While this may also mean that the deal is worth the amount recorded in the owners' equity, this does not necessarily mean that the deal could be sold for that amount. Much more needs to be taken into account when determining the selling price of a business. However, the balance is an important report that indicates how much and how much you pay at a given time.
Income Statement or Income Statement shows income and expenses. It summarizes the profitable business activity for a certain period of time. A part of this report lists all your income: earned, passive, or portfolios. The other part of the report lists all the costs. It looks like this:
= Net Income
Regular preparation of income data helps measure financial progress. Most managers and investors pay more attention to earnings statements and often see abridged versions of financial pages that represent the highest revenue stream and the highest net income level.
Cash Flow Statement
for Cash Flow, Revenue and Expense. The cash flow statement summarizes the sources and uses of financial resources during the financial period. A successful business must handle both profit and cash flow, not equal to each other. Cash flow statements often look like this:
Basic Cash Flow Statement
1. Section Operating Activities. Cash flow from profitable transactions in the business
Part 2 Investment activities. Cash flow and outflow from investing activities.
Part 3 Financing Activities. Cash Flow and Outflow
The sum of the three cash flows described above determines the net increase or decrease in cash in the period. Net cash flow from the first part, business does not always correspond to the result in the profit and loss statement. The reason for this is that actual cash flow and sales revenue are at a different time when sales revenue and expenses are entered in the bookkeeping. The most noteworthy is the profit power of the business, but it is important to understand and know the cash flow from the profit, and this is an important finding.
No MBA required and no CPA to run a business. Understanding basic bookkeeping, however, helps you financially manage your business, investments, taxes, and financial management. If you do not understand the accounting bases, it will be disadvantageous. If the accounting features and the three basic accounting statements described in this section are new to you, you should definitely look for resources to learn more about this subject. If you already have basic knowledge of accounting principles and statements, be sure to keep them on top of both your business and your personal life.
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