Business Accounting Financial Transactions

Question: Discuss about theBusiness Accounting for Financial Transactions. Answer: Introduction The terminology accounting implies a recording process that records all the financial transactions in a systematic as well as in comprehensive way. In other words, it can also be said that accounting is an effective process that helps an accountant to analyze, report and summarize all the financial transactions related to the business with the aim to lapse both the tax collection agencies and entities. According to Parry (2015), accounting is considered as the basic language of any type of business. Therefore, it is a vital factor to gather knowledge about the basics of business accounting. Reflective Learning Journal In order to gather knowledge in the field of basic accounting, it has been found that there are various terminologies that are counted as the important term. Therefore, a list of terms and terminologies or an accounting glossary has been prepared below that will help me to learn and gather knowledge and will also clear my concepts and theories regarding business accounting along with various formulae and equations. Cash Management and Budgeting The terminology cash management is mainly used in case of any growing or new business, where, this broad term refers to collection, disbursement and concentration of cash (Ebert and Griffin 2015). The objective of this management is to manage and balance the total amount of cash of a business of an organization in a peculiar way that will help to maximize the cash availability not invested in inventories or fixed assets. This involves the avoidance of risk regarding insolvency. The factors that are monitored as a cash management include the management of cash balances within an organization, level of liquidity of a firm and the strategies of short-term investment. On the other hand, budgeting is defined as a plan for the future of any business that provides a plan regarding future expenditure and income along with its savings. In other words, it can also be said that budgeting is a guideline that helps the management team of an organization to predict and understand the future spending and saving of an organization (Brinca et al. 2016). Depending on the future expenditure and saving, an organization is operated. In addition to this, a cash budget is defined as an estimation of the total cash outflows and cash inflows for a particular business of an organization over a specified period of time (Collier 2015). Therefore, it can be said that cash budget helps an accountant or the management team of a firm to assess whether the specified entity has sufficient amount of cash to operate successfully. Therefore, it can be said that from this concept of budgeting, cash budget and cash management, I have learned the importance and their role in implementation. I have got a clearer idea regarding the concepts of budgeting and cash budget and its basic difference. I have also understood that the cash management is dependent on the budgeting or cash budget and vice-versa. This basic concept of business accounting will help me in my future as I have gained knowledge that cash management is an important factor for any start-up business or any new business. Therefore, if I would like to be an entrepreneur in future, then I will be able to implement these concepts and can run my own business successfully. In addition to these, all these basic knowledge, concept and theories will also help me to take part in any inter-college competition or quiz competition as these concepts have helped me to differentiate between each of these related terminologies. Periodic and Perpetual Inventory system - Periodic Inventory system is the procedure of valuating the inventories with the aim to prepare a financial report, where, at a specified time interval, a physical inventory count is occurred (Mintz 2016). In addition to this, Periodic Inventory system helps to keep and maintain a pathway of the inventory at the beginning of the phase; both the purchases and sales that are done at same phase of time are also traced under the section asset of a financial statement. On the other hand, the perpetual inventory system is the bookkeeping procedure for inventory that helps in recording the sale and/ or purchase of stock by using the method of point-of-sale (computerized) and endeavors the asset management software (Wier, Stone and Hunton 2015). In addition to this, the perpetual system of inventory gives a exhaustive view about the adjustments within the inventory with an urgent coverage of inventory amount in the stock. Therefore, it can be said that this imitates the goods level on hand. Thus, a detailed study on the periodic Inventory system and perpetual inventory system has helped to clear my concept regarding their definition, importance and implementation. In addition to this, I have also learned their main difference regarding implementation within an organization. I have gained knowledge about the merits and demerits of periodic Inventory system and perpetual inventory system. Additionally, this concept will help to self-evaluate and therefore, it will encourage involving myself in the self-assessment examination as well as in quiz competition. Moreover, the teaching in the prior subject inventory has facilitated me to gather knowledge regarding these two types of inventory systems. Thus, it can be said that these basic knowledge will facilitate me to gather additional information about the business accounting. Inventory valuation - The inventory valuation is the expenditure which is associated with the stock of an organization towards the end of a specified period of time. The inventory valuation is counted as an important element that helps in calculating COGS and can be used for loans as collateral (Ahadiat and Martin 2015). It has been found that generally the inventory valuation is expressed in the balance sheet of the organization as the current asset. Usually, the inventory valuation is made based on the costs or expenses that are sustained by an organization to gather the inventory and also to transform them into a particular circumstance where it will make ready to sell. It has been found that the costs which are involved within the inventory valuation concept are - import duties, handling, freight, production overhead, direct materials and direct labor. It can be said that this concept has also enriched my awareness about the fundamentals of business accounting. The detailed study has helped me to study more regarding the terms and terminologies of business accounting. The strong understanding of business accounting will facilitate me to earn further information about the topic and this in return will assist me in my future to turn out to be an expert in the ground of business accounting (Kaplan and Atkinson 2015). In addition to these, the clear and detailed concept regarding the basic of business accounting will also help to take part in the corporate quiz and self-assessment examination. All these participations will also give me an opportunity to learn more new things and all these will help me in my future to become a successful entrepreneur. Inventory costing methods It is the cost of holding products in store. The capital, taxation, depreciation, shrinkage costs, warehousing, obsolescence and insurance are also involved as a percentage of inventory value (Gibson and Haynes 2015). Generally, the smaller businesses mainly use four types of methods for calculating inventory costing and to account for cost of goods sold (COGS). These include - Last in First out (LIFO), First in First out (FIFO), Specific Identification Method and Average Cost Method (O'Connell et al. 2015). Additionally, each type of these methods is best suited to different financial aims and different conditions. Thus, it is an important factor for the entrepreneurs to have knowledge regarding the various types of inventory costing methods, as they should implement the most appropriate one for the most accurate accounting system. Thus, this specified learning about the kinds of methods of inventory costing will facilitate me in self-assessment examination and also in self-evaluation. These concepts will improve my awareness concerning the basic topic of business accounting, thus, it will encourage me to take participation in the quiz competition. Therefore, it can be said that these basic concepts, theories and information regarding the basics of business accounting will help me to recognize the other concepts that are dependent on these concepts and theories. Thus, I can say that these basics will assist me to collect more information in future regarding the business accounting. Conclusion Thus, it can be concluded that, business accounting is a very important theme for any person who wants to be a successful entrepreneur in future. In addition to this, an individual who wants to become a specialist in the ground of accounting and want to rule the business world should learn this business accounting subject. The reason behind this is that the accounting is measured as the basic language of any business, whereas, the basic knowledge regarding the business accounting is the key to become a successful business person. Therefore, the basic concepts and theories of business accounting should be clear, as this will help an individual in future. I have made a glossary of different terms and terminologies that are associated with the subject business accounting such that it can provide me with different types of knowledge regarding the particular topic. References Ahadiat, N. and Martin, R.M., 2015. Attributes, Preparations, and Skills Accounting Professionals Seek in College Graduates for Entry-Level Positions vs. Promotion.Journal of Business and Accounting,8(1), p.179. Brinca, P., Chari, V.V., Kehoe, P.J. and McGrattan, E., 2016.Accounting for Business Cycles(No. 531). Federal Reserve Bank of Minneapolis. Collier, P.M., 2015.Accounting for managers: Interpreting accounting information for decision making. John Wiley Sons. Ebert, R.J. and Griffin, R.W., 2015.Business essentials. Upper Saddle River, NJ: Pearson. Gibson, J.L. and Haynes, W.W., 2015.Accounting in small business decisions. 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