Every business aims to achieve higher returns. The right and accurate knowledge of Accounting & Bookkeeping promise better returns to a business. The foundation of any company is laid on investment which demands proper management. Hence it is essential to know the A B C D of Accounting & Bookkeeping to strengthen the backbone of any business. Read further to get a brief insight into some of the alphabetically arranged worlds of Accounting & Bookkeeping.
The A B C D of Accounting & Bookkeeping begins with A for Accounting, B –for Bookkeeping, C for Cash flows, D for Debits/Depreciation/Deposits, E for Expenses and F for Finance.
Accountancy can be defined as a practice, a skill of recording, classifying and reporting on business transactions for a business. It gives a review to the management for the financial results and highlights the status of an organization.
Bookkeeping is an essential record of financial transactions and is an essential part of the accounting process. The transactions include purchases, sales, receipts, and payments by a person or an organization or corporation. In layman terms, Bookkeeping is a constant day to day record of financial transactions of every business. It ensures that records of the individual pecuniary transactions are correct, up-to-date and comprehensive
Cash flow can be termed as an inflow of money into a business; be it from sales, investments or financings. Cash inflow is the antonym, the opposite of cash outflow. A business is considered reliable if its cash inflow reserve is substantial and significant.
A debit is a deduction of an amount from an account that leads to a rise in an asset or a direct fall in a liability or owner’s equity on the balance sheet. The debit is an accounting entry which either results in a rise in the number of assets or a fall in liabilities on a company’s balance sheet. In fundamental accounting, debits are balanced by credits, which operate in the precise opposite direction. There is another term “deposit.” Deposit is an act of saving and securing your money by placing it in a trustworthy financial institution such as a bank. The last ‘D’ term is depreciation. In economic terms, depreciation is a fall in the value of an asset. Depreciation is a method of reallocating the cost of a tangible asset over its useful life span of it being in motion.
Expenditure can be coined as an outflow of money to another person or a group, paying for its items or services. Expenditure varies from person to person. For example for a tenant, expenditure is rent for a student; it is tuition fees. The moment an item is bought it directly goes into the category of an expense. An expense is a cost “paid” or “remitted,” usually in exchange for something of value. Expenditure involves three more terms, i.e. ‘Expensive,’ ‘Inexpensive’ and ‘Expenses of the table.’ An item which cost a great deal is expensive; things which seem to cost little are inexpensive. Lastly, the ‘Expenses of the table’ are expenses of dining, refreshments, a feast, etc.
The term ‘Finance’ is defined as the management of money which includes activities like investing, borrowing, lending, budgeting, saving, and forecasting. In finance, there is another essential term called corporate finance. Corporate finance includes the tools and analysis utilized to prioritize and distribute financial resources.
If you have entered the Accounting world, you can never miss out on bookkeeping. Both Accounting and Bookkeeping are vital parameters of business world breathing on accuracy and discipline to ensure greater success and endless returns.