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Accounting 101 - Ultimate Guide to Accounting Basics - Imprezz


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Title: Accounting 101 - Ultimate Guide to Accounting Basics - Imprezz

Accounting 101 Ultimate Guide to Accounting
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Accounting is one of the most discussed topics in
the world of business. Not only business owners,
but even a regular employee is also familiar with
accounting. They send bills, keep a record of
profits, losses, and costs. Every business is
involved in some form of accounting irrespective
of its scale. Understanding accounting basics
under GST is necessary to manage finances for
your business and personal life. Statistics
prove that 82 of all businesses mostly fail due
to inadequate or insufficient cash flow
management. About 99.7 of small companies are
more likely to encounter negative cash flow
management (source https//
). Accounting indeed seems to be a daunting task.
However, heres a comprehensive COVID-19 guide to
accounting basics become your own
accountant. In this article, you will learn the
concept of the accounting system, accounting
principles, importance of accounting, and small
business accounting 101 checklists to help
you start or grow your small business ideas.
Basics of Financial Accounting for Entrepreneurs
Business Owners Business owners or
entrepreneurs cannot rely on accountants
entirely they need to make sure they are doing
it right. Managing cash flow requires a basic
understanding of accounting fundamentals,
importance and types. We have coupled a list of
topics that will help you better understand the
basics of finances.
Basic Accounting Principles
Accountants or businesses must adhere to a
particular set of rules and benchmarks while
reporting financial statements. The common set of
accounting standards accepted universally are
known as accounting principles. Although each
countrys accounting principles differ, they are
mostly noticed to be of the same
fashion. Accounting standards are framed to
ensure that the principles of reporting financial
statements are understandable for businesses
across the world. Heres a list of Generally
Accepted Accounting Principles (GAAP) that every
business owner should know. 1.   Economic
Entity The principle states that the owner and
the business are two different entities each
carries various liabilities. 2.   Revenue
Recognition The principle ensures that the
revenue generated by a business is recognised on
the accrual basis of accounting.
3.   Conservatism The principle suggests
accountants and businesses adopt the most
unfavourable option under a situation where there
is more than one acceptable option for
reporting. 4.   Consistency The principle states
that any business can break the consistent usage
of accounting methods when another exemplary
method is better. 5.   Historical Costs The
principle of historical costs mandates businesses
to record their assets under the purchased
values whether assets were brought now or years
ago. 6.   Full Disclosure The principle ensures
that an enterprise provides full disclosure of
all the necessary information concerning its
users, investors or lenders in the financial
statements as a footnote.
7.   Going-Concern The principle states that no
business shall be forbidden from continuing
forever. They can continue to achieve their goals
and plans in the foreseeable future without
intending to liquidate the enterprise. 8. 
 Matching Concept The principle ensures that the
debit side of the financial statements matches
with the credit side. 9.   Materiality The
principle states that financial information with
a material effect should form a part of the
financial statements. 10.   Monetary Unit The
principle states that only transactions stated in
terms of currency with a monetary value should be
recorded in the business accounts.
11.   Reliability The principle states that
businesses must only record transactions that can
be proven and carry significance evidence. 12. 
 Revenue Recognition The principle states that
businesses revenue must be recognised on the
occurrence of transactions regardless of the
amount on actual receipts. 13.   Time Period The
principal sets the standardised time period for
reporting financial statements, i.e., monthly,
quarterly or annually. Read the detailed
description of accounting principles various
subjects, click here  Basic Accounting
Principles for Beginners.
Importance of Accounting Steps to Accounting 101
For businesses, accounting is more or less like
the heart of a body. Managing finances
effectively helps keep the business alive.
Practical accounting is crucial to incorporate or
grow a business successfully. What are the basic
accounting procedures? How do you know if you are
doing your accounting right? While there are
several tips for money management available
online, who has the time to examine them
all? Small businesses around the world can
manage their financial operations effectively by
implementing advanced accounting software like
Imprezz. It helps business owners better focus on
other crucial areas of business operations.
However, small business accounting can be nailed
by following a step-by-step guide to success.
Here are seven significant steps to basic small
business accounting.
Determine the Type of Business Entity It is
crucial to determining the entity type that best
suits your business objectives before
incorporation. Based on the complete information,
it is ideal to ask for insights from a Certified
Public Accountant (CPA). It can help in making
the right financial decisions concerning the
long-term tax implications and legal
obligations. Open a Bank Account Dedicated for
Your Business Never intermix your funds with
business funds. Setting up a separate business
account is a smart way to keep track of your
business revenue generation. Moreover, it also
streamlines the processes of managing your books
and funds from a legal standpoint.
Set-Up an Accounting Software or Hire an
Accountant Businesses must analyse, track and
report each transaction at the time of
occurrence. Several software programs offer
business intelligence tools, and it is one of the
best ways to manage your accounting operations.
You can choose Imprezz GST billing software, an
integrated accounting platform your business
must-have. Otherwise, you can also opt for
outsourcing or bookkeeping methods for your
business. Track Your Business Expenses Money is
the fuel that keeps the business running many
expenses incurred while starting or growing a
business. It is crucial to record all the
necessary bills, documents, and receipts,
including the expenditure of meals, business
travels, goodies, and gifts.
Establish Budget Forecast Financial health
primarily depends on money management. Thus,
start-ups must have an estimation of incurring
and outgoing expenditure for their businesses
both in short-run and future. It helps business
owners set their organisation goals
accordingly. Get-Going with a Payroll
System Payroll system plays a crucial role in
paying employees and yourself. You cannot pay
your employees casually through fund transfer or
by writing a cheque. Several business
intelligence software offers payroll management
system. Otherwise, you can also outsource payroll
management depending on the number of employees
working at your firm.
Understand GST Requirements of Your
Business Your business must always comply with
GST from day one. The Indian government has
strict implications of GST that every registered
company must follow. Do you run an unregistered
business in India? Its time for you to register
your business and enjoy the tax benefits. Read
more about the online GST registration process on
our blog section. Being well versed with your tax
requirements include understanding the sales tax
requirements, tax payment schedule and GST laws
and rules. Tax schedule alone differs depending
on your tax entity, business income, and tax
payable to the government.
Personal Accounting Personal accounts are
related to individuals, companies, firms,
corporates, group of association, etc. It may
either belong to a natural person, artificial
person or representative person. Personal
accounting is carried out with the principle
debit the receiver, credit the giver. With the
implementation of a personal accounting
information system, you will better understand
your finances. Daily Accounting Bookkeeping is
the process of recording each transaction daily,
as and when it occurs. Recording daily accounting
activities in an accounting system enables
business owners to track their income and
expenses that is crucial to draft financial
statements and analysing the metrics of business
  • Daily accounting involves various accounting
    tasks. Heres a to-do list for your business
    daily accounts management.
  • Refresh Your Financial Data
  • Review Reconcile Each Transaction
  • Record Payments Received
  • Track Your Accounts (Accounts Payable
  • Record Inventories in the System
  • Create and Send Invoices to Your Clients
  • Pay/Schedule Your Payments
  • Back-Up Your Financial Data

Online Accounting You can either handle your
accounts manually or by using Internet
technologies. Online accounting is known as the
most effective bookkeeping methods. Unlike manual
recording, it offers error-free invoicing and GST
returns filing. The modern online accounting
system has successfully replaced traditional
software, spreadsheets and manual paper-based
Accounting Vocabulary
  • Nailing the secret language of the accounting
    world is crucial to sustaining in the business.
    It would help if you familiarised yourself with
    the most common accounting terminologies to have
    a successful accounting career. To help you get
    started, we have listed some of the commonly used
    accounting terms.
  • Accounts Receivable (AR)
  • Accounting (ACCG)
  • Accounts Payable (AP)
  • Assets (Fixed and Current) (FA, CA)
  • Asset Classes
  • Balance Sheet (BS)
  • Capital (CAP)
  • Cash Flow
  • Certified Public Accountant (CPA)
  • Cost of Goods Sold (COGS)

  • Credit
  • Debit
  • Diversification
  • Enrolled Agent (EA)
  • Expenses
  • Equity
  • Insolvency
  • Generally Accepted Accounting Principles (GAAP)
  • General Ledger (GL)
  • Trial Balance
  • Liabilities (Long Term Current)
  • Limited Liability Company (LLC)
  • Net Income (NI)
  • Profit Loss Statement (PL)
  • Present value (PV)
  • Return on Investment (ROI)
  • Bonds Coupons (BC)

Conclusion Small business accounting might seem
like a daunting task, but the efforts are always
worth it. Accounting not only helps track your
income and expenses it also enables you to see
the big picture. Accounting influences most of
the critical business decisions. Be it simple
calculations or understanding the tax
obligations, master accounting disciplines by
implementing ideal accounting software. Imprezz
is an online invoicing and billing platform
helping businesses stay GST compliant. Implement
the software, and your business will thank you.
We offer a 14 days free trial software program 
Log in to get started.
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