Accounts Personnel, Auditors and Tax Consultants need to complete all finalization related tasks at the earliest to submit the return in time. If proper accounting is done from start to end of the financial year, it becomes very easy to complete audit & finalization in time.
Accounting is the art of recording, classifying and summarizing and it is an important part in any organization. The transactions that are occurring in day to day business is need to record, and it is the task of the accountant and the accountant provide the information, that help to know that whether the organization is in profit or loss and how to improve the business performance and it include the journal, ledger, trial balance and profit &loss account.
Accounting is very essential for anyone (i.e. business and day to day life). It plays important role in the success of a Business. We may compare Accounting with the daily Balanced Diet Food which we take for our health. Also accounting is Food for any Business.
Accounting refers to the process of bookkeeping that is involved in making the financial records of business transactions. These Bookkeeping methods are also used in preparation of statements concerning the assets, liabilities and operating results of a company. It is a very important process in an organization. The information derived from the accounting processes gives complete financial information about the company and conveys its financial standing to the owners and employees of the company. It also shows which products or assets of the company are most profitable and those which are weak. Day to day bookkeeping on the accounting principles, helps in keeping record of daily transactions and also helps in preventing any frauds.
Accounting track the assets, liabilities, owners equity, revenue and expenses of an organization. It provides not only current operating information for management but also track the historical transactions of the entity. It encompasses not only cash earned by the organization but also the investment activities, financing activities, lending activities, non-cash charges and recognition of and expiration of the useful life of assets used in the operating of the entity. It also encompasses intangible recording and recognition of items that may have a value yet are not specific in nature such as organizational cost, patents, copyrights and trademarks. I will reflect monies owed, accruals of interest on those monies and also the amounts of excess over operating expenditures that have not been distributed. It is the basis of calculating taxes owed and due as well as a parameter as to the health of the entity and is essential for owners and managers in calculating and projecting operational problems, budgets and compensation. Without accounting no entity could survive. It is the essential information needed to not only run but also to have continued growth of an enterprise.
For all above benefits, one should always keep proper accounting of Business. On the basis of records & Financial results further Business Activities and targets can be planned for next year. Eating healthy & balanced food is good habit. But regular check-up of health is essential, which keeps everyone healthy for a longer period. On same lines, if proper accounting, records of important information, data etc. (i.e. input) is maintained, then it will be (i.e. output) useful for further projections and ultimate results.
For e.g. For a Construction Business, important documents & records regarding each project or Scheme should be kept. So that information about Profitability of each project can be ascertained and estimates for new schemes can be done easily.
Many times, accounting data entry is started at the time of audit. (i.e. at the year end.) And in a hurry of Finalization in time, our Auditors, Consultants also cannot check the data properly which is submitted to them at the last moment. Ultimately it may be impossible to rectify the mistakes.
Regularly receipts & payments take place. But no proper records of all transactions are kept. Especially cash receipts & payment are not recorded regularly. And finally at the time of filing of Income Tax return Owner of the Business runs to his Consultant with incomplete records and expects that he should file his Return in time. For finalizing the accounts Consultant should get all the necessary information, documents & statements in time. And the given data should be checked and verified thoroughly before finalizing. At the last moment the Consultant is also helpless and the Balance Sheet has to be finalized with errors. Providing proper data in time to the Consultants must be followed strictly. Keeping daily record of all transactions saves lot of time – of client & his Consultant also. And Consultant will get sufficient time to finalize accounts of almost all his clients. Now a days automation, various software, Accounting packages like Tally, SAP have made all the procedures easy. Also all the payments, Tax Returns can be made online which helps to save valuable time. It is compulsory to make the Tax payments & Return filing on or before particular due dates as per rules defined. For fulfilling formalities everyone is busy for whole Financial year by Monthly, Quarterly, Half yearly tax returns, periodic internal audits. This helps to keep data as much correct as possible and saves penalty for Late Payment of Tax or Late filing of Returns. Thus minimizes our expenses. Such timely work ultimately helps to Accountants as well as Auditors, Tax Consultants to check the data before closure of Financial year and have correct reports. So the data should be checked thoroughly before sending it to Auditors for finalization. It is the duty of accountant to record the transactions accurately. For eg. Correct accounts head, correct amount, proper narration and exact balancing of every ledger account etc.
By: Sujata Mehendale
M. Com DTL
Working as Accounts Manager in Private Sector