Accounting-Getting Your Numbers Right Is Key To Success
Learn As Much As You Can:
Getting your numbers right is the key to all success in whatever business venture you are undertaking. At first it may seem that this is not the case-you have to get a product, market it, sell it, maintain customers, and a lot of other things-but in the end you have to have the numbers-and they better be right. The numbers can make or break you-especially when it comes to taxes and other government regulations. There are countless examples of how owing taxes and getting the numbers wrong have ruined people.
Obviously full on-in depth procedures of accounting are way beyond the scope of this post-and website. Also, I am not in any way giving any type, kind, or otherwise financial, accounting, or any other fiscal advice that would require some kind of licensing. There is my disclaimer. I am merely saying get your shit right-get an accountant when your business gets big and pay your freaking taxes or suffer your fate.
Financial Accounting is a field of accounting that is involved with the analysis and the reporting of all the business transactions that happen within your business. Financial Statements are the outputs from this effort of accounting. These statements are available for stockholders, banks, the general public, employees, suppliers, business owners, and government agencies. The statements of cash flows, profit/loss statements, balance sheet are examples of these statements.
To get these statements businesses follow GAAP-Generally Accepted Accounting Principles. It covers all the rules, guidelines, standards, and conventions used by the accounting worlds.
Wikipedia has a great outline for all of the issues of financial accounting and I highly recommend that you read it as a start. https://en.wikipedia.org/wiki/Financial_accounting
Managerial Accounting on the other hand is used internally within the business to help make better business decisions within the organization. The management uses the concepts from accounting in order to get the information they need.
The main-and critical difference in my opinion-is that the information gathered using managerial accounting is not shared with others the way that financial accounting is shared with others. Another key difference is that financial accounting deals with the past accounting period-whereas managerial accounting is essentially looking toward the future for planning purposes. Finally, financial accounting is governed by GAAP-while managerial accounting is calculated based on the information that management needs.
Again, Wikipedia has a great beginner article on managerial accounting:
Here is a great picture of the enterprise financial management:
Learning as much as you can about all that the above picture lays out is a key to your business and entrepreneurial pursuits
For your business-learn all you can about the different types of accounting. You don’t have to become an accountant for a living (unless that is part of your business)-but getting your numbers right is key to success. You can tell your costs, losses, profits, and tax liabilities. Not knowing this can lead to disaster. I highly recommend going here https://www.coursera.org/ they offer an incredible amount of free and basic courses in a variety of subjects including accounting. Check it out.
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