Financial accounting refers to collecting, summarizing and presentation of the financial information resulting from business transactions. It reports the operating profit and the value of the business to the stakeholders. In other words, financial accounting is used for reporting financial transactions to the stakeholders in a format that is acceptable and adaptable by all businesses.
- Accounting Concepts
- How are financial statements prepared?
- Presentation of financial statements
Bookkeeping is the first step in the accounting process and arguably the most important one. A bookkeeper will compile all financial data – from transactions to wages – and turn them into easy-to-read reports that are ready for future analysis.
Benefit of BookKeeping
There are multiple benefits to having a good bookkeeper, and with all the changes happening in the financial world, every business will want to have such a person on staff.
- Detailed Recording
- Always Compliant with the Law
- It Is Easier to Plan
- Instant Reporting
- Better Relations With Banks and Investors
- Faster Financial Analysis
- Easier Audits
Accounting Concepts that form the basis of financial accounting are:
Financial accounting can be done on an accrual basis or cash basis. Accrual basis is highly accepted. An organization may also use a combination of both. Cash basis of accounting requires transactions to be recorded only when the transaction results in a flow of cash. However, under accrual basis, a transaction is recorded when the transaction occurs and revenue is recognized.
Once an organization selects the method, cash or accrual, it should consistently use the same.
Economic entity concept
This concept assumes that the owners are separate from the business and there are no personal transactions recorded in business.
Going concern concept
Under this concept, it is assumed that the organization will remain in business for a long time and hence the revenue can be deferred to a different period.
This concept stresses that the expenses relating to a particular income must be recorded in the same period. This ensures that a transaction is fully accounted for.
Reporting of all material transactions should be the aim of reporting. Material transactions are those transactions if omitted can alter an investors analysis of the business.
How are financial statements prepared?
The financial statements of all businesses in a particular country/region will follow a standard format and standard accounting principles. This enables consistency and helps in effective comparison of the financial statements and financial position of different companies. The accounting principles that an organization follows depends on the regulatory and reporting requirements of the region and audience to which a business caters. Indian companies follow Indian Accounting Standards, while the companies operating in the US follow the Generally Accepted Accounting Principles (GAAP) and companies with international exposure follow International Financial Reporting Standards (IFRS).
The standards issued by the various boards, not only assist an organization in reporting the transactions correctly but also give clarifications for complex transactions faced by businesses. The standards ensure uniform accounting. These standards issued are amended from time to time keeping in mind the nuances of business.
Presentation of financial statements
Financial accounting is the reporting of transactions that have occurred during the financial period. A financial period can be any period. However, year-end financial statements are usually prepared for 12 months. In India, a financial year is from 1st April to 31st March. Some companies follow the calendar year for reporting. At the end of the said period, the organizations will present its financial statements also known as financial reporting.
The financial statements report on five main aspects of a business.
The revenue and expenses are accounted for in the income statement and the asset, liabilities, and equity are reported for in the balance sheet.
Why Choose Us
Can CA N. R. Gugale do my taxes?
While CA N. R. Gugale doesn’t do tax prep internally, we do work with some exceptional CA partners – and can arrange for your taxes to be done for you at a great price (and that your books are in-line with our CA partners’ standards).
If you prefer to use your own CA, we will ensure your books are accurately updated throughout the year so they’re ready to be passed on to your tax preparer.
Do I need a bookkeeper if I have an accountant?
Contrary to popular belief, accountants and bookkeepers perform distinctly different tasks for the businesses they serve. Bookkeepers are responsible for on-going maintenance of their clients’ general ledgers. A bookkeeper’s common responsibilities consist of:
Compiling data on a daily basis
Categorizing expenses in the general ledger
Reviewing the general ledger for accuracy
Reconciling bank statements against the general ledger
Generating financial statements
Accountants use the accurate and up-to-date general ledger maintained by the bookkeeper to provide advisory services, such as:
Analyzing the company’s financial data
Preparing income tax returns
Providing tax planning advice
Do you serve businesses with under 1Cr. in annual revenue?
Absolutely. We offer bookkeeping packages for small businesses of almost every size!
What others financial services does CA N. R. Gugale provide?
CA N. R. Gugale provides the following services:Money-in/revenue reconciliation – Recording deposits, matching payments to accounts receivable, cashflow management Expense management – Expenses categorization, accounts payable, receipt and mileage tracking Bill payment – Online bill payment, document storage Payroll services – Payroll software setup, reconciliation Financial reporting – Producing/reviewing financial statements from GL (i.e. Income Statement, Balance Sheet)
What types of businesses does CA N. R. Gugale serve?
CA N. R. Gugale serves small and medium-sized businesses of all kinds, but we are best known for our expertise in these four industries:
Professional services – Real estate agents, insurance agents, financial advisors and more
Health and wellness – Gyms, salons, spas, dentists and more
Restaurants – Quick-service restaurants, fine dining restaurants, coffee shops, caterers, specialty food providers and more
Shouldn’t my bookkeeper be local?
Small businesses no longer need to work with a local bookkeeper. The internet and cloud technology makes it easy for bookkeepers to securely access their clients books anytime, anywhere. Business owners can now select a bookkeeper who truly understands their industry and operations, instead of hiring the local, community bookkeeper by default.
Deepjyoti Associates bookkeepers serve all Indian time zones and are easily accessible.
I have multiple businesses, how can you help me?
Deepjyoti specializes in accounting and bookkeeping services for multi-unit businesses and franchises. We can manage the books for each individual location and give you insight into your business’s overall financial performance.