Accounting Best Practices For Your Business
Financial accounting information must be assembled and reported objectively. When you rely on virtual accounting services, you have the right to be assured that your financial accounting information is free from bias and inconsistency, whether deliberate or not. For this reason, financial accounting relies on certain accounting best practices and standards called "Generally Accepted Accounting Principles" (GAAP).
GAAP compliance derives from tradition. In any report of your virtual accounting information (audit, compilation, review, etc.), the preparer/auditor must indicate whether or not the information contained within the statements complies with GAAP.
Here is a general list of GAAP compliance principles:
Principle Of Regularity: Regularity is defined as conformity to enforced rules and laws.
Principle Of Consistency: The consistency principle requires accountants to apply the same methods and procedures from period to period.
Principle Of Sincerity: According to this principle, the accounting unit should reflect in good faith the reality of the company's financial status.
Principle Of The Permanence Of Methods: This accounting principle aims to provide coherence and allow comparison of the financial information published by the company.
Principle Of Non-Compensation: One should show the full details of the financial accounting information and not seek to compensate a debt with an asset, a revenue with an expense, etc.
Principle Of Prudence: This accounting principle aims to show the reality "as is" -- one should not try to make things look
prettier than they are. Typically, revenue should be recorded only when it is certain and a provision should be entered for an expense which is probable.
Principle Of Continuity: When stating financial information, one should assume that the business will not be interrupted. This accounting principle mitigates the principle of prudence -- assets do not have to be accounted at their disposable value, but it is accepted that they are at their historical value.
Principle Of Periodicity: Each financial accounting entry should be allocated to a given period, and split accordingly if it covers several periods. If a client pre-pays a subscription (or lease, etc.), the given revenue should be split to the entire timespan and not counted for entirely on the date of the transaction.
Principle Of Full Disclosure/Materiality: All financial accounting information and values pertaining to the financial position of a business must be disclosed in the records.
Tax and Audit-Ready Financial Data
At AccountingDepartment.com. your accounting is done properly every day. Each month, your financial accounting data is reviewed by your AccountingDepartment.com controller, financial reports are presented and explained and your books are closed for the period. At year end, your virtual accounting records are up-to-date and ready for use in preparation of income tax returns. Your AccountingDepartment.com team is available to work with your tax preparer or independent auditor throughout the year to ensure your financial accounting data is presented correctly for your reporting needs.Source: www.accountingdepartment.com