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The Main Benefits of Outsourcing Your Accounting Function

The Main Benefits of Outsourcing Your Accounting Function
Outsourcing has become increasingly popular over the last few decades as companies have realised that delegating a variety of business operations to a third-party provider can give them a number of benefits. Indeed, outsourcing your business operations can provide you with a number of benefits, especially in relation to your accounting functions while you should also understand that a variety of third-party providers are available on the market. This is especially pertinent if you are starting up a company and you do not have the relevant accounting experience to carry out this particular management function of your business. In addition, you should also be aware that accounting is essential so that you can generate profitability as well as reduce your operating costs. However, if you are unaware about how to go about the process of outsourcing your accounting function, you should think about consulting an online business directory as you will be able to identify a number of providers that you can contact. 1. Increase your profits One of the main benefits that your business could enjoy by outsourcing your accounting function is that you can increase your profitability. Indeed, outsourcing allows you to spend your resources on the important core business operations so that you can generate more profit. This is definitely an advantage if you are looking for an outsourcing provider, such as Acclime, that can give you the highest quality accounting services in Vietnam. It is also important to understand that you can minimise your risk as well as ensure your financial statements are prepared correctly. This is especially pertinent if you do not have the in-house accounting knowledge while making sure your financial statements are correct at all times is imperative if you want to be legally compliant at all times. 2. Reduce your operating costs Furthermore, you should also be aware that outsourcing a particular business function can allow you to reduce your operating costs. Indeed, by outsourcing your accounting function, you will not have to pay salaries or other recruitment expenses to hire qualified and experienced accounting personnel. As a result, you can focus on your core operations if you are just starting out in business, instead of the support functions that are required for you to carry out your business. 3. Improve your decision making process Finally, you should be aware that if you are looking to outsource your accounting function, you can improve your decision making process. Indeed, this is especially important if you hire an experienced and professional third-party provider as they will be able to provide you with information pertaining to your accounts as soon as possible. This can allow you to improve your decision making process as well as yield reliable information so that you can make better decisions in a short amount of time. Increase profitsReduce costsImprove decision makingThe Main Benefits of Outsourcing Accounting Function Therefore, in conclusion, if you are a business owner and you are looking to increase your profitability as well as reduce your operating costs and improve your decision making process, you should consider outsourcing your accounting function to a third-party provider as soon as...
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Types of Accounting Information

Types of Accounting Information
Types of accounting information may be classified into four categories: Operating informationFinancial accounting informationManagement accounting information andCost accounting information 1. Operating Information: This is the kind of  information which is required to conduct the day-to-day activities. Examples of operating information are: Amount of wages paid and payable to employeesInformation about the stock of finished goods available for sale andEach one’s cost and selling priceInformation about amounts owed to and owing by the business enterpriseInformation about stock of raw materials, spare parts and accessories and so on. By far, the largest quantity of accounting information provides the raw data (input) for financial accounting, management accounting and cost accounting.  Spend Wisely 2. Financial Accounting: Financial accounting information is meant both for owners and managers and also for the use of individuals and agencies external to the business. This accounting is concerned with the recording of transactions for a business enterprise and the periodic preparation of various reports from such records. The records may be for general purpose or for a special purpose. Focus on the Long Term  3. Management Accounting: Management accounting makes use of  both historical and estimated data in assisting management in daily operations and in planning for future operations. It deals with specific problems that is faced by enterprise managers at various organizational levels. The management accountant is often concerned with finding alternative courses of action and then helping to select the best one. For e.g. The accountant may help the finance manager in preparing plans for future financing or may help the sales manager in deciding the selling price to be fixed on a new product by providing suitable data. Generally management accounting information is used in three important management functions: ControlCo-ordination andPlanning 4. Marginal costing This is an important technique of management accounting which provides multi dimensional information that helps in  decision making. Specialised Accounting Fields A number of specialized fields in accounting also have evolved besides financial accounting. Management accounting and cost accounting are the result of rapid technological advances and enhanced economic growth. The most important among them are explained below: 1. Tax Accounting: Tax accounting is all about the filing of tax returns and the consideration of the tax implications of proposed business transactions or alternative courses of action. Accountants specializing in this branch of accounting are familiar with the tax laws affecting their employer or clients and are up to date on administrative regulations and court decisions on tax cases. 2. International Accounting: This accounting is concerned with the special issues associated with the international trade of multinational business organizations or MNC’s. Accountants specializing in this area must be familiar with the influences that custom, law and taxation of various countries bring to bear on international operations and accounting principles. 3. Social Responsibility Accounting: This branch is the newest field of accounting and is the most difficult to describe. Social responsibility accounting is so called because it not only measures the economic effects of business decisions but also their social effects, which have previously been considered to be immeasurable. Social accounting is also known as social accounting and auditing, social and environmental accounting, corporate social reporting, corporate social responsibility reporting, non-financial reporting or accounting. Benefits of Social Accounting 4. Inflation Accounting: Inflation accounting is a term describing a range of accounting models designed to correct problems arising from historical cost accounting in the presence of highinflation and hyperinflation. Inflation accounting is used in countries experiencing high inflation or hyperinflation. 5. Human Resources Accounting: Human resource accounting is the process of identifying and reporting investments made in the human resources of an organization that are presently unaccounted for in the conventional accounting practices. It is an extension of standard accounting principles. This system of accounting...
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Advantages and Limitations of Ratio Analysis

Advantages and Limitations of Ratio Analysis
What are the advantages and limitations of ratio analysis? Advantages: It is an important and useful tool to determine the efficiency with which working capital is being managed in a business organization. It is a ‘health test‘ for a business firm in that it can gauge whether the firm is financially healthy or not. It aids the management of business concern in evaluating its financial position and performance efficiency. It clearly shows the trend of changes in the market position (upward, downward or static), as it covers a number of previous accounting (financial) periods. The progress or downfall of a firm is clearly indicated by this analysis. It assists in preparing financial estimates for the future (financial forecasting). It facilitates the task of managerial control to a great extent. It helps the credit suppliers and investors in deciding upon a business firm as a potential investment outlet or desirable debtor. Ideal or Standard ratios can be established which can be used as reference points of comparison for a firm’s progress over a period of time. It communicates important information with relation to financial strength, earning capacity, debt (borrowing) capacity, liquidity position, capacity to meet fixed commitments, solvency, capital gearing, working capital management, future prospects etc. of a business concern. This analysis is also useful for bench marking purpose- to compare the working result and efficiency of performance of a business enterprise with that of other firms engaged in the same industry (inter-firm comparison). It helps the management to discharge their basic functions of planning, coordinating, controlling etc. It serves as an instrument for testing management efficiency too. It acts as a useful tool for deciding on certain policy matters. Limitations: Accounting ratios calculated based on ratio analysis will be correct only if the accounting data on which they are based are correct. It is only an analysis of past financial data. In certain cases ratio analysis might prove to be misleading with regard to profits. Continuous fluctuation in price levels ( or, purchasing power of money) seriously affect the validity or comparison of accounting ratios calculated for different accounting periods and make such comparisons very difficult. Comparisons become difficult also on account of difference in the definition of several financial (accounting) terms like gross profit, operating profit, net profit etc. There is lot of diversity in practice as regards to the measurement of ratios. Different firms use different accounting methods and the validity of comparison is severely affected by window dressing in the basic financial statements. A single ratio will not be able to convey much information. This analysis only gives part of the total information required for proper decision-making. This should not be taken as a substitute for sound judgement.  It should not be overlooked that business problems cannot be solved mechanically through ratio analysis or other types of financial analysis. Follow ManagementGuru Net’s board Accounting – Financial and Management Accounting on...
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How to Calculate Gross Profit

How to Calculate Gross Profit
Gross Profit  It is a required income statement entry that indicates total revenue minus cost of goods sold. It is the company’s profit before operating expenses, interest payment and taxes. It is also known as GROSS MARGIN. The gross profit on a product is computed as: Net Sales – Cost of Goods Sold (COGS) This concept is well understood if you are able to clearly distinguish between variable and fixed costs. VARIABLE COSTS: Materials used Direct labor Packaging Freight Plant supervisor salaries Utilities for a plant or a warehouse Depreciation expense on production equipment Machinery  FIXED COSTS: Fixed costs generally are more static in nature. They include: Office expenses such as supplies, utilities, a telephone for the office, etc. Salaries and wages of office staff, salespeople, officers and owners Payroll taxes and employee benefits Advertising, promotional and other sales expenses Insurance Auto expenses for salespeople Professional fees Rent  Variable expenses are logged as cost of goods sold. Fixed expenses are counted as operating expenses (sometimes called selling and general administrative expenses). While gross profit is a monetary entity, the margin is expressed as a percentage. It’s equally significant to track since it allows you to keep an eye on profitability trends. Gross Profit Ratio = Gross Profit / Net Sales The gross profit margin is computed as follows: When the ratio is expressed in percentage form, it is known as gross profit margin or percentage. Gross Profit / Net Sales *100 = Gross Profit Margin It is equal to the net sales minus cost of goods sold and net sales are equal to total gross sales less return inwards and discount allowed. Benefits of calculating gross profit: This ratio determines how efficiently the management utilizes labor and raw materials A company uses its gross income to fund activities such as research and development, marketing etc., which are vital for generating future sales. A prolonged decline in this margin is a cleat-cut indication of sales drop-down and ultimately earnings. Trends in this margin reflect basic pricing decisions and material costs of a company. This profit margin is an accounting measure designed to estimate the financial health of a business or industry. It may be noted that generating a profit margin alone cannot vouch for the financial health of a firm; rather the business must have sufficient cash flow in order to pay its bills and compensate employees. An entrepreneur might compare the return that would be available from a bank or another low-risk investment opportunity to that of his EXISTING profit-margin to gauge whether his startup is doing well. → Profitability...
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What Does a Career in Accounting Demands for?

What Does a Career in Accounting Demands for?
What Does a Career in Accounting Demands for? Are you vying for a career in accounting field? Everybody envy accountants for there is a misconception that they are Demi-Gods. Though a good accounts manager can act like one who can save you from a dire situation by manipulating the accounts skilfully, the demands and challenges in this field are too high to be savored. Purchase Your Copy of “Careers with a Degree in Accountancy and Finance” at Gumroad  So what does it take to become a reputed accounts man in your circle and also enjoy what you do! Self analysis is the best way to understand what you really want to be. There are certain traits characteristic to people belonging to this community. See if you are gifted with those attributes; if not, you can always train yourself to gain expertise. 1. Are you good at numbers– Mathematics, Yuck! If this is your reaction please quit reading this article as numbers play an integral role in accountancy. Figures, Figures and more Figures determine the profit and loss status of a company. If you are passionate about playing with numbers it goes without saying you are already a half accountant. The thrill of taking control and handling numbers make or break a company. Jackie Mansion jocularly puts it – “Did you ever hear of a kid playing accountant – even if they wanted to be one?” 2. Are you a good listener and can you read between the lines? A good auditor will allow the client to talk and listen to what he says. Then he tries to extract the exact kind of information he needs to make the ends meet. Empathy is an innate quality and if you are not going to be a good listener then please revise your consideration of becoming an accountant. Sometimes the client may not know what you wish to seek; it is your responsibility to frame simple questions in a language that he understands and pull out answers. 3. Can you avoid being temperamental? 90% of the time your clients are going to say “No” to whatever you suggest. Alas, it is not their fault; the corporate Bosses and CEO’s always aim big and most probably will not be aware of the consequences of their impulsive actions. They always think about clinching a deal and conveniently overlook the effects of their financial and corporate decisions on the account and subsequently on the accountant. For example cash has to be handled very carefully and every penny has to be accounted for properly.  A bank cashier will know the importance of cash handling as it is very important for them to balance the inflow and outflow at the end of the day. For corporate firms, it becomes mandatory to reduce the cash dealings and account every transaction in the form of a check or electronic transfers like RTGS or NEFT or EFT. The point is, you should have the nerve to talk to a company’s head if he is planning for a bad move and suggest what could be done for the good of the company (Income tax and Sales purposes). 4. Are you wise when it comes to choosing clients? Whether you are a part time practitioner, Full time accountant, Accounts manager or Free lancer, do your homework before accepting the offer. Ultimately you need to see your payments coming through and nobody works here for a song. Big practitioners take a big cut half yearly or annually but if you are a part time accountant, it is always better to go for monthly payments or get paid after the completion of individual project s....
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