Accounting is all about recording of all cash and non-cash transactions in such a way that it represents the true and fair position of the firm or company in front of its owner and others who have an interest in the financial statements of the company. It comprises a stated and straightforward process that consists summarizing of the transactions, analysis of the transaction, whether it is economic or cash or non-cash transaction, and reporting the transaction to its responsible desk.
A non-specialist must know about the process of accounting, its concept, rules, and regulations. As well as about its designated authority and the standards they have formed which are needed to be followed to maintain the decorum of the business entity in the market.
Here are some essential Accounting Tips for a Layman:
- Must know basic terms of bookkeeping.
The first and foremost tip for every layman is that he should know about the basics of bookkeeping well. The terms used in bookkeeping, the process, and other facts and factors too. He should keep in mind about the job he is performing as if he is analyzing the transaction then he must be focused and must know about whether the transaction is of a cash nature or non-cash nature it will help in recording the transactions well and speedily
- Aware of Accounting standards the firm is following.
The layman must know about the rules and standards made for the business entities. This knowledge will be helpful to him to work in a legalized manner as well as in a planned framework. Like AS 2 states valuations of inventories similarly, AS 3 deals with Cash flow statements. These standards give them guidance to work. Although, following the Accounting Standards has made them confident about their work and will let them get good trust over and over because of the work they do.
Keep updated with the changes.
The layman must stay updated with the changes in the internal as well as external environment of the organization as it affects his job directly or sometimes indirectly. The internal factors like-
what policy the organization is following,
which method of depreciation is being followed,
What is the time duration given to debtors
Are some points and factors that affect the working of the person. So better to be aware of the changes and rules that are followed. External factors like any change in the government policy that can affect business should be known about that too as it will affect the industry as well as him indirectly.
- Aware of his boss.
The layman must know about the boss too whom he is answerable again. It is also an important point to keep in mind as he is performing his job under someone who is trusting him and has given the responsibility of maintaining accounts which is itself a critical task to do.
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