In The Accounting World

IN THE ACCOUNTING WORLD

The accounting process as we know it today evolved from the work of an Italian friar, Luca Pacioli, who, in 1494 had a book, published that set out the details of the double-entry bookkeeping system. He described most of the accounting cycle as it is still used today, and included such familiar concepts as journals and ledgers, assets and liabilities, capital, income and expense accounts. He demonstrated year-end closing entries and the method of proving a balanced ledger by using a trial balance,Original concepts from 1494 still in use today. Since then, through the work of professional bodies, development of guidance tools such as the accounting standards, and recognised and reputable courses of study, the profession of accounting has consolidated into the position of respect it enjoys today. Amazingly, the original concepts documented by Friar Luca are still valid and the rule still is that for every debit there must be a corresponding credit. However, the advent of computers and accounting software has extended the reach of accounting into every corner of business. 

Accounting software is one of the most valuable resources available to small business. Prior to its invention, small and one-person businesses relied on taking source documents such as receipts, invoices, cheque butts and bank statements to their accountant for processing. They then had to wait for income statements that were often not available for weeks after the fact to know how the business was doing. Now, they are able to enter this data into the software daily and run regular reports that give them up to the minute information. Good Accounting Software Removes Guesswork around Compliance and one of the benefits of having good accounting software is that it removes much of the guesswork around compliance, provided the data is entered correctly.  All of this information is captured and contained within the accounting software. However, as all computer users know, this technology is only as good as the support it is given. The information that enters the system must be correct at point of entry and funnelled into the right places. There will be regular upgrades that need installing and there should be back-up systems in place in case of computer failure. Historical records must also be kept for several years as required by taxation legislation.

Most small business owners have neither the time nor the training to know the fundamentals of bookkeeping or how to set up and operate internal computerized accounting systems, that is why there is need to know the mysteries in the accounting world in as much as the softwares are available.