If you have ever balanced a checkbook – you have performed an accounting procedure! Saved money to put a down payment on a new car – you have performed an accounting procedure!
All business perform some form of accounting procedures, pay and send out bills, invoice customers for services performed….. these are all accounting procedures.
Every individual and every business must have some kind of accounting system in place. Without it, you won’t know what has been spent and the finances could quickly get away from you. Staying on top of the accounting for individuals, small or large businesses, is a necessary activity on a daily basis. Not doing so could result in a bounced check or a lost deposit and both scenarios could be equally devastating.
Accounting is basically information, and this information is published periodically in business as a profit and loss statement, or an income statement. This statement shows the businesses revenue and expenses during a particular period.
Why is this form important? It indicates to managers, owners and investors whether the company made or lost money during the particular period being reported.