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Usefulness of Quickbooks to Maintain Accounting Records

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The meaning and importance of the accounting Accounting by definition from Merriam-Webster dictionary is “the skill, system, or job of keeping the financial records of a business or a person” (A) or according to investopedia “the systematic and comprehensive recording of financial transactions pertaining to a business” (B). These two do not show though, how important the accounting is for the company and how strongly it can influence the firm’s position in the stock market and investors’ approach towards it. While some definitions might be underestimating the significance of this process, the truth is that accounting is one of the key functions for almost every business. As a technique designed to record, classify and summarize a company’s business operations, with the aim of providing information for decision-making purposes, the accounting process generates the financial statements, which are fundamental for analysing a company and assessing its historical performance.

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Tracking your company’s finances helps you stay on top of cash flow and make smart financial decisions, and setting up strong financial controls aids this process. Financial controls are best practices and policies you put into place so that you have a clear paper or digital trail that shows you exactly how much money your business spends and how much it earns. Keeping all your receipts, invoices, and finance-related documents serves as an example of a financial control. Those documents let you track what you spend and earn, and you can look back at them if you need more information about specific transactions. Plus, you need to keep financial documents to satisfy Canada Revenue Agency (CRA) requirements. Make this financial control effective by having an organized storage system. Expense tracking apps often let you scan receipts to store digital copies, which saves physical space in your office. When you need to keep paper copies of financial documents, storing those items in a filing cabinet with individual file folders keeps everything organized. Labels make it easier to find what you need. If you don’t already keep your business and personal finances separate, you should. With independent accounts, you can more accurately track your income and expenses, and you can take it even further by setting up multiple commercial bank accounts for different purposes. For example, you could use one account for deposits, one for expenses, and one for taxes. This separation lets you know exactly how much your business spends and earns in any given time period

Having one account just for deposits lets you transfer money to other accounts to make sure you have the money for those expenses.

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An accounting system comprises of six elements; people, procedures and instructions, data, software, information technology infrastructure, and internal controls. People are the users of the system who operate and use the information stored to develop or enhance decisions. Procedures and instructions involve all methods for processing and retrieving data in a company. Data are the information relevant to the organization’s procedures and practices (Hall, 2013). The software involves programs installed to process data. Information technology infrastructure involves the hardware used in operating the system while internal controls are security measures that protect sensitive data (Mancini, Vaassen, and Dameri, 2013). Companies and businesses use AIS to make the accounting process easier by utilizing programs and other systems to perform accounting functions. Accounting software allow for compilation of financial data used for taxation purposes, book-keeping, and payroll requirements, amongst other accounting functions

The most significant aspect of AIS is in the promotion of the activities of an enterprise to form a reliable image to internal and external stakeholders. AIS promote such activities through effective preparation of updated statements, provision of information sufficient for the data to be understandable to all users, contribution of statistics through system linkages, and in tracking the liquidity. The first step in conducting these functions involves recording data such as expenses and profits. This is referred to as data input in the system. Next the information goes through the system process referred as data processing, and later the data is filed for storage. The system files and stores the information where it is needed, and can be retrieved for use.

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For the most part, proper accounting records help business owners to avoid interest and penalties as they make it easier for them to pay the right amount of tax and at the right time. Penalties are here forever (if any), but proper records can help business owners avoid them. By the time the deadline comes, everything should be in good order ready for filing

Keeping proper business records can be seen as a daunting task at first. However, the key is to break the stuff down into series of manageable and straight forward tasks that can be accessed and updated at regular intervals to prevent paper work from piling up.

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Boczko, T. (2007). Corporate accounting information systems. Harlow: Financial Times Prentice Hall.

Hall, J. A. (2013). Accounting information systems. Mason, OH: South-Western Cengage Learning.

Mancini, D., Vaassen, E. H. J., & Dameri, R. P. (2013). Accounting information systems for decision making. Berlin: Springer.

Turner, L., & Weickgenannt, A. (2008). Accounting information systems: Controls and the processes. Hoboken, N.J: Wiley.

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