The definition of Accounting comes from the words Accountancy / Accounting / Constituency which is absorbed into Indonesian. Accounting means an activity or process in identifying, recording, classifying, processing, and presenting data relating to finance or transactions so that it is easy to understand in making the right decision.
Accounting is an important part of a company if you are managing a business. The accounting function helps business owners know the company’s condition and make decisions for the company. Learn more about accounting below.
Accounting can be considered as the language of the company in providing information in the form of financial data that is used for decision making. Every company needs two kinds of information about the company, which is about the value of the company and information about the company’s profit / loss. With accounting, you can find out the amount of capital owned by the company and the development of the company in a certain period. The accounting process can also be the basis for calculating taxes and for determining company management policies. With the accounting process, you can also explain to third parties such as banks or investors about the condition of the company precisely when you need business credit at any time.
Also read: Benefits of Using Accounting Software in Business
Main Activities in Accounting
Accounting has three main activities in it, including:
1. Activity Identification
Activities to identify transactions or financial flows that occur within the company. This identification is important to be able to produce comprehensive data.
2. Recording Activities
After the transactions are identified then these transactions are recorded in the form of financial statements.
3. Communication Activities
After the transactions are identified and recorded, the next step is to communicate the results of the notes to those who need communication information reports, both from internal or external parties.
Types of Accounting
After knowing the definitions, functions, and activities of accounting, we will now discuss the types of accounting that exist. Just like the field of management, accounting also has a variety of specializations, among others.
1. Financial Accounting
The field of accounting that specifically studies about financial transactions such as debt (liabilities), capital (equity), or changes in company assets.
2. Management Accounting
The field of accounting that provides real data to the company’s internal parties (management) to determine the company’s next policy.
3. Cost Accounting
The field of accounting which aims to license production costs or other costs.
4. Tax Accounting
The field of accounting which aims to take care of taxation. In this case, to minimize taxes that must be paid by the company without violating applicable regulations.
5. Accounting Examination
The field of accounting in the form of an examination of accounting records or financial statements carried out by independent accountants without pressure from any party. Accounting auditing is usually called an audit, and the person who audits is called an auditor.
6. Budget Accounting
This field of accounting studies the preparation of the budget or expenditure of a company and then compares it with actual expenses.
7. Government Accounting
The field of accounting that studies the presentation of financial statement data or financial statements made by government agencies, both regional or central institutions.
8. Accounting Education
The field of accounting whose output is directed specifically in the field of education, for example to become accounting instructors, researchers, or other jobs related to accounting education.
9. Accounting System
This field of accounting is related to the process of making accounting procedures or supporting tools, and is followed by determining the steps to be taken in the future.
10. International Accounting
The field of accounting that studies international issues such as international trade which is common in multinational or international companies.
That is some explanation about accounting. After knowing the various explanations above, you must already know how important accounting is, especially in running a business. Through the accounting process, you can more easily create business strategies by looking at the company’s financial statements. Taking steps for a company can also be taken into account with accounting. From accounting, business owners can find out the condition of the company,