Important Accounting Basics to Master Before Becoming a Certified Bookkeeper
If you look back at historical books, you will get to know that Accounting is one of the oldest professions in human history. Personalities like J.P Morgan, Luca Pacioli, and Josiah Wedgwood are the founding members of this profession in the late centuries. (Success tax professionals)
Even today, accountants are needed almost in every terrain that has a decent cash flow. They play a crucial role in the overall management of an organization.
But becoming an accountant isn’t just about completing a degree from a college and performing long tables of calculations, but mastering your basic skills and enhancing your efficiency.
But how can someone improve these while also not sacrificing their regular curriculum of institutes?
Be patient because this article will explain to you everything regarding these accountancy skills and how to master them.
Understanding The Fundamental Accounting Principles
Similar to other highly respected professions, accounting has some fundamental principles that need to be learned and closely followed if you want to start your career off on the right foot. If you are just starting and are asking yourself, “how do i start a bookkeeping business?” then arguably, the first point is knowing what the fundamentals are. When it comes to this field, they include:
Generally accepted accounting principles (GAAP): These are a set of standards that one must follow when presenting financial statements for your client or employer.
Revenue recognition principle: Establishes the timing for revenue recognition and recording.
Expense recognition principle: You need to know how to match expenses with the revenue they create if you want to generate an accurate reflection of how money is being used.
Full disclosure principle: As you will read in the section about ethics, being open, honest, and transparent is fundamental to success in this industry.
Objectivity principle: Requires financial statements to be verifiable and free from bias.
Familiarity With Financial Statements Types
When it comes to the so-called “books,” there are various accounting reports that you need to become au fait with if you are to become successful. In practice, there are four fundamental types of statements that, when looked at in conjunction with one another, can paint a more comprehensive picture of a business and how healthy or unhealthy its financial situation may be. These steps include:
Income statement
Balance sheet
Cash flow statement
Statement of owner’s equity
Learning about each of these statements and their essential components will put you in good stead to become a certified accountant.
Basics Of Double-Entry Accounting
Double-boking is a core part of ensuring transparency and honesty in your work (which, as you might have already cottoned onto, is a running theme in this post).
It is founded on the premise that each financial transaction produces two equal and opposing impacts, documented in two distinct accounts.
Some main advantages of learning this aspect are that you will help to prevent fraud and keep yourself and your clients compliant with the law without being scared of any consequences.
Did you know? In the USA, over 2000 accountants are hired by the FBI every year. (U world)
Importance Of Accurate Record-Keeping
Accuracy is a paramount objective in accounting, as any inaccuracies can lead to serious legal outcomes if they are severe enough.
You will find that you can also be held liable by your employer or client if you manage their books in such a way that it leads to trouble for them.
Making more accurate measurements is a skill that can be learned with enough effort, and preferably involves making it a habit to check and double-check every action you take.
While this ultimately takes longer, it’s a skill worth developing, as it will set you apart as a trustworthy accountant who takes your job and those you work for seriously.
Moreover, inaccurate bookkeeping could make you liable in any cases that arise due to poorly kept statements, and in some cases, you could be prosecuted as being negligent. At the very least, you will be held accountable, even if the case is tort rather than criminal.
Knowledge Of Accounting Software
Modern management includes having an in-depth perception of how to use many of the more popular accounting solutions in the market. Most modern systems will be cloud-based, meaning that you will be able to access them from wherever you are at whatever time you choose, as long as you have the requisite permissions to log in.
If you already have a deep understanding of the basics of accounting, then using these systems will only translate to learning how to navigate the virus features and how to use the data to create statements precisely.
By getting to grips with these SaaS systems, you will be able to enhance your workflow massively and productivity to a point that enables you to get on with other tasks that require more cognitive load.
Intriguing insights As per this graph, we can see, that numerous job profiles are looking for perfect candidates in the accountancy field. These professionals are in the highest demand in the financial sector.
Tax Regulations And Compliance Basics
Tax is inevitable, and everyone will have to pay sooner or later. This post isn’t written to discuss the ins and outs of tax law specifically. It is rather focused on letting all those who want a career in accounting know that they ought to spend a decent amount of time learning about the tax code and other issues.
Moreover, this isn’t a one-off thing, and you will be required to remain up to date with the latest laws and any changes that might be taking effect due to a change in politics, etc.
Importance Of Professional Ethics
As a trainee accountant, you really must drill into your mentality that this industry stands on a foundation of ethics. While you hear about accountants who cookbooks from time to time, for accounting to remain a highly-regarded profession, you must establish a sense of morals within yourself that guide how you work.
It will be your job to ensure your clients’ money is carefully looked after and that they pay the correct amount of tax as owed. This is fundamental to the job for many reasons, but if you only want to look at it from a normal POV, then honesty and integrity are among the main things that employers and clients will look for.
Accounting is based on several core principles that, if not followed correctly, could bring the entire industry into disrepute. Aside from the ethical issues, learning how the basics will leave you in a great position to get hired as soon as you have achieved certification.
