An accounting System is a system in which a company organizes its financial reports and financial information. It can be processed either manually or automatically. The purpose of this accounting system is to record and keep track of the costs, revenue, and other activities. The main idea is to track all the data that affect the financial status of a business operation.
Content Outline
Definition of Accounting System
Having a good infrastructure accounting system enables businesses to keep track of and manage the nature of their finance. This includes the cash flow of sales, purchases, assets, and liabilities. An accounting system for business indeed is a very useful tool when a company needs to produce different financial reports. Being an entrepreneur, you have to rely on proper data reports to make decisions for your business. In the past, all data collection procedures were done manually. Fortunately, we are witnessing an information age with advanced technology. Nowadays you can enter all the records, change them, and analyze just within a few clicks of the button to your accounting system on your computer or mobile phone. In the past, a load of manual calculations was required to bring the ledger book of accounts up to date.
Types of Accounting Systems
1. Managerial Accounting
This type of accounting produces data for making plans and controlling operational processes. The sub-discipline of management that we will focus on is cost accounting and lean accounting. Cost accounting classifies the expenses made by the business on different financial transactions and operations. Through lean accounting process examination is used to identify where too much cost is used and where resources and costs are wasted and so find out where to add more value.
2. Inventory Accounting
Inventory accounting tools are very important in managing the whole inventory system in that they provide different methods to track inventory levels, and other related activities. In barcode tracking a unique barcode is assigned to the products, which are then scanned to calculate the stock and quantities. RFID (Radio Frequency Identification) has the same principle of using radio waves for the identification and tracking of items which makes it more automated and thus more efficient in the management of the inventory.
Both the barcode tracking and the RFID systems let firms to keep an accurate stock levels count, simplify and streamline the inventory management processes, and eventually boost the efficiency. They involved in these basic functions as counting and replenishment and order fulfillment by providing real time data on inventory status. Furthermore, they provide the means for reducing and eliminating mistakes and inaccuracies in inventory records, which are essential for effective decision making and cost management.
In general, barcode tracking and RFID systems are great inventory accounting aids, thus making it possible for the businesses to have trust in their process of tracking, planning, and optimization.
Read: 9 Reasons Why You Should Choose FastLane as Xero Accounting Partner
3. Industry Specific Accounting
Industry-specific accounting can be referred to as a group of tools designed to respond to the distinct problems of a group of people in a particular sector. To illustrate, the kind of accounting employed in a sales office will not be the same as that used in a retail practice. These systems are shaped in such a way so as to fulfill the particular demands of the industries they provide for.
4. Not-for-Profit Accounting
Non-for-profit accounting is built around a particular set of needs meant to ensure efficient cash flow transparency. The adoption of such strategy is crucial as it allows businesses to obtain relevant financial reports customized to their predicament. This specialized accounting system is a must-have for not-for-profit entities to have the transparency and compliance with the regulations, and also to communicate well with the stakeholders.
How FastLane Group Can Help?
At FastLane Group, with our professional accounting service, you’ll gain an interesting insight into your business’s financial health, enabling smarter decision-making and driving growth. Let us help you streamline your operations and achieve your business goals faster.
Contact us today and find out how we can help you to achieve financial success.