Accounting Paper

Accounting System Recommendation

In today’s news we here every day about different companies going bankrupt or out of business from bad money handling. We also here of the white collard crimes of people stealing money from their work place, and eventually getting caught and put in jail. Due to having an accounting system in place, the owners of these businesses are able to spot missing amounts of money by using proper accounting techniques. In this paper, I would like to explain to you in brief detail, why we should have an accounting system implemented for this business. Accounting is the process of recording, reporting, summarizing, and analyzing various financial transactions. Having an accounting system in place allows business owners to monitor the efficiency and effectiveness of their business. It also allows you to create a budget for your business, as well as keep track of your assets and liabilities as you look to grow your business.

Three key things you want to know when it comes to accounting are the words assets, liabilities, and stockholders equity. Assets are known as any resource owned by a business such as furniture, trucks, buildings, etc. Liabilities are amounts owed to creditors in the form of debt and other responsibilities. Stockholders equity is basically what you have after you minus your liabilities from your assets, and it leaves you with how much your business is actually worth. The basic structure of assets, liabilities, and stockholders' equity is also known as the basic accounting equation. This equation is, assets equal liabilities plus stockholders equity (Assets = Liabilities + Stockholders Equity.) As you see, all three of these things are related to each other, and this relation comes from a financial statement called a balance sheet.

In accounting we use four financial statements to help keep track of everything. These four financial statements are the income statement, the retained earnings statement, the balance sheet,...