Accounting 101: What is Accounting?
Right Choice Accounting Solutions is an “outsourced accounting department” firm. We act as your full-service accounting department while you focus on running your business. Simply put, we save you time and money with strategic accounting services.
What does that actually mean?
There are many different areas of accounting that work together to ensure strong financial performance for a company. Each business has its own specific accounting needs; but, generally, accounting and finance are responsible for ensuring that the business finances are being recorded, reported, and analyzed effectively.
Areas of Accounting
1.Accounts Receivable & Revenues – This area accounts for the money that comes into the business. They answer questions like “who owes us money?” and “was that payment recorded?” Keeping track of revenue, outstanding invoices, and other money that is incoming is crucial for business success.
2.Accounts Payable & Expenses – This area accounts for the money that needs to go out of the business. This is considered the most important area of accounting by a lot of business owners. The effective planning of business expenses, liabilities, and other money that leaves the business is crucial.
3.Payroll – Payroll is critical because it includes making sure that all employees are paid accurately and timely. The analysis of payroll is also important to the business bottom line.
4.Reporting, Financial Statements, & Analysis – These reports are used for budgeting, analysis, etc. and should play a large part in business decisions. The accuracy and dependability of these reports rely on the accuracy of recording information in earlier steps.
5.Control Environment – There are generally accepted accounting principles (GAAP) that help to protect business owners, investors, and other interested parties from fraud, theft, etc. There are many internal controls that help detect and prevent business losses.
6.Tax – Most people are familiar with the idea of paying taxes. For businesses, tax liability should be continuously tracked and planned for. Business owners can save thousands of dollars annually by using effective tax planning.
General Key Positions
1.Chief Financial Officer (CFO) – Head financial officer for businesses. A CFO typically leads the accounting and finance functions. They commonly oversee the “big picture” financial strategy, health of business, and communicate financial information to other lead business executives.
2.Financial Controller – Typically the “second in command” in a lot of financial departments (there are sometimes director level people). The controller acts as a bridge between the accounting department and leadership. A controller typically takes information from the accounting department and communicate it to CFOs, COOs, etc.
3.Accounting Managers & Supervisors – These roles manage day to day accounting activities and oversee accounting staff. They enforce company policy within the accounting department.
4.Accountants & Senior Accountants – These roles measure, interpret, analyze, and help to record financial information for a company. Accountants help to ensure that companies are compliant with GAAP guidance and do a lot of the “groundwork” for accounting departments.
5.Bookkeepers – This is the lowest level role in the accounting department. Bookkeepers handle the initial recording and classifications of transactions that allow the other roles to do higher level functions.
Right Choice handles all these roles at a fraction of the cost while you focus on running your business. Contact us here today to schedule a consultation.