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What is AccountingAccounting is the systematic and comprehensive recording of financial transactions pertaining to a business. Accounting also refers to the process of summarising, analysing and reporting these transactions to oversight agencies, regulators and tax collection entities. The financial statements that summarise a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period.

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What is AccountingAccounting is the systematic and comprehensive recording of financial transactions pertaining to a business. Accounting also refers to the process of summarising, analysing and reporting these transactions to oversight agencies, regulators and tax collection entities. The financial statements that summarise a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period.

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C Clements

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The main purpose of accounting is to determine the financial position of the business at any given time, provides financial statements and generally looks after all assets and financial activities within the business while providing financial support.
Key functions within an accounting department can include things such as:

Payroll- Ensuring the employees of the business get paid the correct remuneration at the correct time.
Accounts Receivable – “Money in” keeps track of creditors as assets, ensures that creditors pay. Keeps track of money paid to the business by creditors

Accounts Payable – manages the businesses liabilities business as a debtor, keeps track of what needs to be paid and when.
Inventory – Keeps track of any items owned by the business that they intend to sell. For example stock in a shop.
Fixed Assets – Looks after the tangible and intangible fixed assets of the business such as buildings, machinery, and intellectual property or trademarks. Some fixed assets can depreciate in value quickly or become obsolete quickly, so the accounting department manages them carefully to keep the business competitive.

A Link that explains the Accounting function in simple terms:

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What Is the Purpose of an Accounting Department Within an Organization?

An accounting department provides accounting services and financial support to the organization it belongs to. The department records accounts payable and receivable, inventory, payroll, fixed assets and all other financial elements. The department's accountants review the records of each department to determine the company's financial position and any changes required to run the organization cost-effectively.

Purpose of an Accounting Department

An accounting department is a dedicated team of specialists who manage the finances of an organization. While not every member of the team will be a certified public accountant, team members will generally have training in bookkeeping processes and procedures. By developing an accounting department, a company can help ensure full transparency in its financial transactions, while also providing specialized, centralized support to other teams and managers. Quality financial management can help ensure the ongoing health of a business.

Accounts Payable and Receivable

The accounts payable section of an accounting department records goods and services that it receives and the payments it owes, such as inventory from a supplier or other expenses. The department records each accounts payable as a liability and accounts receivable as assets. Assets such as revenue and customers' obligations pay for goods and services.

Payroll

The payroll function of an accounting department ensures that the organization pays its employees accurately, including bonuses, commissions and benefits. The department monitors employees' time off, vacation and sick days. It pays the government taxes as well as union dues and other withholding from an employee's paycheck. The department reimburses employees for expenses and makes payments to vendors.

Inventory

A company's inventory is the goods owned for the purpose of sale. Inventory is usually sold within a year. An accounting department watches the cost of inventory over a specific period against its revenues to ensure that the cost of raw materials, labor and overhead do not negatively impact cash flow. The accounting department tries to find a balance between high inventory levels that satisfy customers but are costly to the company and low inventory levels that satisfy the company's expenses but may dissatisfy customers.

Fixed Assets

In order to function effectively, a company may need machinery, equipment, vehicles and other fixed assets it uses over several years. The accounting department is responsible for recording fixed assets on a balance sheet with depreciation. Fixed assets could be intangible--such as goodwill or a trademark--or tangible--such as machinery. As the company needs an upgrade to remain competitive, its financial statements will determine what the business can afford.

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What Is the Purpose of an Accounting Department Within an Organization?

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An accounting department provides accounting services and financial support to the organization it belongs to. The department records accounts payable and receivable, inventory, payroll, fixed assets and all other financial elements. The department's accountants review the records of each department to determine the company's financial position and any changes required to run the organization cost-effectively.

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1. AssetsAssets are the wealth that has been accumulated by the business and is owned outright without lien or loan. It may be items that depreciate over time, or goods that are sold to customers. This may include cash and investments, buildings and property, accounts receivable, warehouse inventory, equipment and supplies.2. Balance sheetThe balance sheet is an important aspect of business. It records the basic accounting formula of assets = liabilities + stockholder equity / capital at a certain point in time, either monthly, quarterly or yearly. From the balance sheet the financial health of the business can be ascertained.3. General ledgerThe general ledger is the side of the bookkeeping ledger that contains the balance sheet and the income statement accounts. Here all business transactions are recorded, including sales, credit purchases, office expenses and income losses.4. Gross marginGross margin or profit is the total number of sales that have been made, subtracted by the associated costs, such as manufacturing costs, wholesales costs, material, and supplies.5. LossWhen a service or product sells for less than what it cost to supply or manufacture it, or when expenses have exceeded revenues of a particular asset, it's called a loss.6. On credit/On accountOn credit or on account means that products or services have been sold with the use of credit. Payment has not immediately been provided for these items, and there may be terms on account that may result in interest charges.7. ReceiptsReceipts is the total amount of cash collected in business transactions over the course of one day. It does not include other revenue collected.8. RevenueIncome and revenue are interchangeable, compromising the total amount of all income collected at one point in time. It may include cash sales, credit purchases, subscription fees and interest income. It differs from receipts, as it can include monies that are not collected at the delivery time.9. Trade discountA trade discount is a percentage discounted from the purchase price, and is based on the volume of goods ordered at one point in time. Higher discounts may be applicable to larger orders, with smaller discounts for lesser orders.10. Trial balanceThe trial balance is recorded in the general ledger, and includes both debits and credits for one particular account. The sheet must balance, with debits equaling credits.

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1. AssetsAssets are the wealth that has been accumulated by the business and is owned outright without lien or loan. It may be items that depreciate over time, or goods that are sold to customers. This may include cash and investments, buildings and property, accounts receivable, warehouse inventory, equipment and supplies.2. Balance sheetThe balance sheet is an important aspect of business. It records the basic accounting formula of assets = liabilities + stockholder equity / capital at a certain point in time, either monthly, quarterly or yearly. From the balance sheet the financial health of the business can be ascertained.3. General ledgerThe general ledger is the side of the bookkeeping ledger that contains the balance sheet and the income statement accounts. Here all business transactions are recorded, including sales, credit purchases, office expenses and income losses.4. Gross marginGross margin or profit is the total number of sales that have been made, subtracted by the associated costs, such as manufacturing costs, wholesales costs, material, and supplies.5. LossWhen a service or product sells for less than what it cost to supply or manufacture it, or when expenses have exceeded revenues of a particular asset, it's called a loss.6. On credit/On accountOn credit or on account means that products or services have been sold with the use of credit. Payment has not immediately been provided for these items, and there may be terms on account that may result in interest charges.7. ReceiptsReceipts is the total amount of cash collected in business transactions over the course of one day. It does not include other revenue collected.8. RevenueIncome and revenue are interchangeable, compromising the total amount of all income collected at one point in time. It may include cash sales, credit purchases, subscription fees and interest income. It differs from receipts, as it can include monies that are not collected at the delivery time.9. Trade discountA trade discount is a percentage discounted from the purchase price, and is based on the volume of goods ordered at one point in time. Higher discounts may be applicable to larger orders, with smaller discounts for lesser orders.10. Trial balanceThe trial balance is recorded in the general ledger, and includes both debits and credits for one particular account. The sheet must balance, with debits equaling credits.

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https://www.accountingdepartment.com/blog/10-basic-accounting-terms-defined

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The purpose of accountingNovember 12, 2017The purpose of accounting is to accumulate and report on financial information about the performance, financial position, and cash flows of a business. This information is then used to reach decisions about how to manage the business, or invest in it, or lend money to it. This information is accumulated in accounting records with accounting transactions, which are recorded either through such standardized business transactions as customer invoicing or supplier invoices, or through more specialized transactions, known as journal entries.Once this financial information has been stored in the accounting records, it is usually compiled into financial statements, which include the following documents:Income statementBalance sheetStatement of cash flowsStatement of retained earningsDisclosures that accompany the financial statementsFinancial statements are assembled under certain sets of rules, known as accounting frameworks, of which the best known are Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The results shown in financial statements can vary somewhat, depending on the framework used. The framework that a business uses depends upon which one the recipient of the financial statements wants. Thus, a European investor might want to see financial statements based on IFRS, while an American investor might want to see statements that comply with GAAP.The accountant may generate additional reports for special purposes, such as determining the profit on sale of a product, or the revenues generated from a particular sales region. These are usually considered to be managerial reports, rather than the financial reports issued to outsiders.Thus, the purpose of accounting centers on the collection and subsequent reporting of financial information.

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The purpose of accountingNovember 12, 2017The purpose of accounting is to accumulate and report on financial information about the performance, financial position, and cash flows of a business. This information is then used to reach decisions about how to manage the business, or invest in it, or lend money to it. This information is accumulated in accounting records with accounting transactions, which are recorded either through such standardized business transactions as customer invoicing or supplier invoices, or through more specialized transactions, known as journal entries.Once this financial information has been stored in the accounting records, it is usually compiled into financial statements, which include the following documents:Income statementBalance sheetStatement of cash flowsStatement of retained earningsDisclosures that accompany the financial statementsFinancial statements are assembled under certain sets of rules, known as accounting frameworks, of which the best known are Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The results shown in financial statements can vary somewhat, depending on the framework used. The framework that a business uses depends upon which one the recipient of the financial statements wants. Thus, a European investor might want to see financial statements based on IFRS, while an American investor might want to see statements that comply with GAAP.The accountant may generate additional reports for special purposes, such as determining the profit on sale of a product, or the revenues generated from a particular sales region. These are usually considered to be managerial reports, rather than the financial reports issued to outsiders.Thus, the purpose of accounting centers on the collection and subsequent reporting of financial information.

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https://www.accountingtools.com/articles/what-is-the-purpose-of-accounting.html

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This department covers the financial aspects of a business. It is responsible for  financial controls and reporting, accounts receivable/payable and payroll. It also responsible for providing the relevant documentation to external entitities such as IRD, also reporting to Management on the financial health, potential opportunities and areas of concern. 

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This department covers the financial aspects of a business. It is responsible for  financial controls and reporting, accounts receivable/payable and payroll. It also responsible for providing the relevant documentation to external entitities such as IRD, also reporting to Management on the financial health, potential opportunities and areas of concern. 

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A useful link that provides further details -

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Print this article or save it as a PDF

Who's watching your bottom line?

The functions of the accounting and finance department in any business can get a little confusing. Entrepreneurs tend think and move quickly, so ensuring the accounting department is stable is pivotal in the growth of your business.

Over the next few articles, we'll discuss how you can clearly define roles and responsibilities of your accounting department, starting with the basics.

What are the Key Roles of the Accounting Department?

While some people may have a differing opinion, the essential roles and duties of virtually any accounting department should include the following:

Money out - making payments and keeping the bills paid

Money in - processing incoming payments

Payroll - make sure everyone gets paid (including the government)

Reporting - preparing financial reports, e.g. P&L, Balance sheets and budgets

Financial Controls - to avoid errors, fraud and theft

Accounting Department Responsibilities in Detail

1. Accounts Payable (money out) - In order to maintain great relationships with vendors making sure that everyone gets paid on time is a vital role. The role of the accounting department includes keeping an eye on opportunities to save money, for example, determining if there are discounts or incentives available for paying certain vendors more quickly. At the very least, AP should be scheduled to assure that the least amount of money has to go out per payment, i.e., no late payment charges!

2. Accounts Receivable and Revenue Tracking (money in) - Another critical duty of the accounting department is to account for and track receivables, including outstanding invoices and any required collection actions. Accounts receivable is responsible for creating and tracking invoices. The responsibility here includes assuring that customers pay those invoices on time, so a system of friendly reminders is crucial.

3. Payroll - Payroll is a critical function of the accounting department and includes making sure all employees are paid accurately and timely. In addition, proper tax is assessed and tax payments are on time with state and federal government agencies.

4. Reporting and Financial Statements - The primary reason you collect data properly in your accounting software is to prepare financial reports that can be used for budgeting, forecasting and other decision making processes. In addition, these and other reports are needed for communication to investors, banks and other professionals that play a role in the growth of your business.

5. Financial Controls - Financial controls include reconciliations, dividing the responsibilities and following the GAAP standards of accounting principles, all of which are implemented with view toward compliance, fraud and theft prevention. The role of the Controller is to ensure procedures are set up properly to manage that process without errors.

Key Positions in an Accounting Department

Now that you know the roles of the accounting department, who are the key players. These are the key positions that you'll find across most business accounting units.

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Chief Financial Officer (or CFO) - CFOs are typically the head financial executive of large businesses. They oversee the financial strategy, health of the business, and manage the rest of the financial department. CFO's are very forward thinking and will help businesses navigate through growth stages and downturns. With their knowledge of company finances, they help senior management understand the financial impact of real-time decisions to ensure the fiscal success of the business.

Their duties include financial planning, reporting and controls, short and long term business strategy, investments, hedging, mergers and acquisitions, cash management, internal risk management, corporate finance, auditing and accounting.

Financial Controller - Financial Controllers are key players within accounting departments and work alongside CFO's, COO's, and Financial Directors. Their function and responsibilities include financial accounting, preparation, reporting, analysis, budgeting, project management and more. Their key role tends to focus on immediate financial issues and management.

Treasury Manager - The treasury manager's role in the accounting department revolves around the formulation and development of treasure policies. This includes identifying the best investment opportunities, developing great banking relations, optimizing credit facilities, and minimizing finance costs.

Accounting Manager - An accounting manager is responsible for a company's accounting activities that include maintaining and reporting on both the cost and financial sets of accounts but does not handle or negotiate. The accounting manager establishes and enforces the accounting principles based on statutory requirements and auditing policy.

Chief Accounting - The chief accountant holds the same responsibilities as the accounting manager, but the role simply differs in terms of the job title.

Accounting Supervisor - Shares the same responsibilities as an accounting manager and provides support as a member of his/her team.

Accountant - Accountants play a key role in finance departments such as the measurement and interpretation of financial information. The results of their work ensure compliance, and provide the groundwork for greater financial strategies.

Bookkeepers - Bookkeepers provide the day-to-day efforts needed to record and assess basic accounting data. They typically do not take a strategic role.

These are just some of the main roles and functions of the accounting department in businesses, there are many more responsibilities the accounting department is responsible for and a number of subcategories. Those will depend upon the specific nature of your business. For instance, inventory control and tracking, government forms and tax filings and fund raising might be other essential areas of focus that your accounting department would be responsible for.

Defining those responsibilities is essential for your business. While the specific roles may vary from business to business, one thing is certain: if your accounting department does not perform these key functions effectively and efficiently, you could be headed for some serious (and not so pleasant) surprises.

The great news is that if these functions are covered well, you'll find that your accounting department creates a solid base and the most important measurement tool for your company's entire operation. If you think you need some help getting your accounting department in order, or would like to outsource it (many companies prefer to do this!), then check out our Accounting Services to learn more.

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Key Functions of Your Accounting Department

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Print this article or save it as a PDF The functions of the accounting and finance department in any business can get a little confusing. Entrepreneurs tend think and move quickly, so ensuring the accounting department is stable is pivotal in the growth of your business.