Accounting is the big machine that turns raw financial information into a clear picture of your company’s current and past financial health. It’s the foundation of everything from cash flow reports to tax returns, projections and more. It’s also essential for business growth, as it reveals which products are best sellers, what parts of the company are costing the most and how much profit each area is making.
The discipline is actually a large group of specialized fields, including bookkeeping, cost accounting, management accounting and tax accounting. The latter two are focused on filing tax returns and ensuring compliance with complex laws. The first three are used to provide a variety of critical business data, such as cash flow, inventory levels and projected sales.
Writing in accounting requires that you understand your audience and tailor your language to fit their level of understanding. For example, you might explain basic accounting principles in simple terms to a non-finance manager while using technical vocabulary when describing valuation methods for financial derivatives.
The earliest accounting concepts evolved in medieval Europe, with merchant Benedetto Cotrugli credited with creating debit/credit accounting in 1458 and Franciscan monk Luca Bartolomeo Pacioli developing double-entry bookkeeping in 1502. Today’s advanced systems are the result of decades of research by both academics and industry experts. Accounting is a key back-office function that provides vital data to the people who make strategic decisions about a company’s future. It’s also required by law enforcement and other regulators, and it’s crucial for securing investors or qualifying for small business loans. Buchhaltung