Accounting is the use of a system of terms, formulas, and other record-keeping devices that allows businesses to calculate, track, and compare their financial growth, or recession in some cases, explains Carlos Hank Rhon. The basic concept of accounting, the accounting equation, involves recording and calculating assets of the business, liabilities, and equity and results can vary depending on whether your business utilizes either the cash or accrual accounting method. That way, financial status of the business can be assessed and understood quickly and easily. Other more in-depth concepts involved in accounting include handling investments, payroll, and auditing for the business.
Importance of Accounting
To have the right idea about the financial health of a company, accounting plays a crucial role. Information about assets, liabilities, debt and other critical factors together decide the expansion plans and future policies of a firm. Hence, a firm cannot afford to get wrong here, states Carlos Hank Rhon.
Accounting is an educational discipline
It is taught in most colleges and universities and even in some technical school and high-school classes according to Carlos Hank Rhon. There are several levels of degrees, specialties, and government-required licenses that someone can, or must, acquire within the discipline of accounting. Accounting has been taught and practiced as a discipline for centuries, and it continues to evolve as practitioners and researchers of accounting encounter ever-changing business, financial, and legal issues. Depending on how a person intends to be involved in the accounting of a business, he or she should receive some sort of training in accounting practices, explains Carlos Hank Rhon. For example, accounting for big businesses may require whole departments or teams of professional accountants. On the other hand, someone simply wanting to keep track of the finances of his or her part-time business could handle the accounting with a basic knowledge of accounting concepts and formulas. The combination of accurate record keeping and accounting are essential pieces of knowledge.
Accounting is a necessary part of any business success
Accounting gives business executives a way to evaluate the financial status of the business. With this financial information, executives can compare the financial status of the company to previous fiscal periods or years, set realistic goals for future fiscal periods or years, and make decisions that depend on or have an affect on the finances of the business. Before starting any new business it is best to understand the accounting process. Also, accounting reports inform business stock-holders and employees and the general public about the financial status of the business, notes Carlos Hank Rhon. In fact, all businesses are required by law to file some sort of accounting reports to the IRS and/or other government and financial entities. Auditing, internal or external, is an important function of business. Having sound and efficient accounting practices will ensure a successful audit as well as insure your business financial success.
Choosing a Accounting and Financial Partner Wisely
Accounting, as aforementioned, is very crucial and thus it is very important to trust the same with a firm that has the necessary experience and expertise. It only works in additional advantage of the client if the accounting partner also specializes in other financial fields like forex trading, commercial lending and banking services, states Carlos Hank Rhon (active in a number of financial fields itself).
A financial partner could be an asset to a firm if chosen wisely. So, make sure you partner with the right firm, states Carlos Hank Rhon.
Content Source: Carlos Hank Rhon - Accounting Defined
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