User:Accountingsecret

Accounting Secret

                                 A Gist On Accounting

There is a common belief that accountant is one who pay and send out the bills that keep the business running. Accountants are not confined only to this. They also keep financial records on profits, costs and losses of business. Even they are referred as “bean counters” Bean counters are none other that accountants who are believed to place undue emphasis on the control of expenditures. You can come to know the profit of being accountant only if you have your own business.

Even if you balance a checkbook despite what type of business you are in, that's still called as accounting. It's part of even a kid's life. Saving an allowance, squandering it all at once - these are accounting principles.

There are some other businesses where accounting is decisive. Well, farmers need to follow careful accounting dealings. Many of them run their farms annually by taking loans to plant the crops. If it's a good year, a profitable one, then they can pay off their loan; if not, they might have to carry the loan over, and interest charges will mount up.

All business and each person need to have some sort of accounting system in their lives. Or else, their assets, savings and even investments can get away from them, they do not be familiar with what they've spent, or whether they can expect a profit or a loss from their business. Staying on top of accounting, whether it's for a multi-billion dollar business or for a personal checking account is a essential activity on a daily basis if you're smart. Not doing so can mean anything from a bounced check or posting a loss to a company's shareholders. Both situations can be equally disturbing.

Accounting is fundamentally information, and this information is available periodically in business as an income statement or profit and loss statement.

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Here Is A Perfect Defination For Profit & Loss.

While defining what profit and loss are, every one will come up with their own meanings. As all other accounting terms has its own definitions,the term profit and loss too has its own meanings. To start with, profit can be called in different ways. Sometimes net income or net earnings are called profits. Businesses that sell products and services generate profits from controlling the attendant costs of running the business and from the sales of the products or services. ROI or Return on Investment can also be referred to as Profit. These terms are used by many companies to refer to short-term and long-term business results. But, companies such as stocks and bonds limit ROI to profit on investments only. Taxable income is sometimes called as Profit.

It's the job of the accounting and finance professionals to review the profits and losses of a company. They have to know what produced both and what the results of both sides of the business equation are. They find out what the net worth of a company is. Net worth is the resulting dollar amount from subtracting a company's liabilities from its assets. In a privately held company, this is also called owner's equity, as anything that is available after all the bills are paid, to put it simply, belongs to the owners. In a publicly held company, this profit is given back to the shareholders in the form of dividends. In other words, all liabilities have the first claim on any money the company makes. Anything that's left over is profit. It's not derived from one factor or another. Net worth is determined after all the liabilities are subtracted from all the assets, as well as money and property. 

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