TEKOA software  TEKOA software  |  My Account  |  Help 

 TEKOA CLOUD ERP

TEKOA software     TEKOA software

Three Accounting Principles of Business Process 

   
2019-02-28 
A well-known fact is that accountants of today's business environment must also be savvy in business processes and can't merely be holed up in their cubicle crunching numbers. While transactional processes are important to the success and continuing on of the business, there is a lot that goes on behind the scenes in regards to getting a product made and on its way to the customer that relies on data and the access of that data. 

If you're an accountant, you'll need to apply those principles you learned back in basic financial accounting courses to how you evaluate and use processes in the business you are in. Principles like materiality, going concern, and matching are going to help you as the accountant oversee everything the business does in order to give your company the advantage it needs in a fiercely competitive global market.

Every business has the ability to get better and to not accept negative consequences due to a poor functional process structure. There cannot be a lack of visibility across processes. Accountants can't stand disorganization and lack of internal controls. Fraud, the dreaded F-word of the accounting world, can't be ignored as companies are moving their data networks to be global to reflect their operations.

I'll touch only on the 3 accounting principles that directly relate to business processes. They are the matching principle, full disclosure principle, and the revenue recognition principle.

I. The Matching Principle: 

We all know that accountants are obsessed with making sure that debits and credits balance and that revenues and expenses are matched. If that's not the case, the dreaded Fraud-shark will rear its ugly head. An enterprise business process will make the task of matching much easier to do and with less staff. If keeping track of every detail associated with manufacturing a product, including the selling and purchasing and overhead associated with the product, a company could potentially have a need to employ a small army of accountants and bookkeepers. An ERP will condense all of that information and make it more accessible to staff members.

II. Full Disclosure: 

Another hallmark trait of accountants is their desire to fairly represent their companies and to present information for stakeholders with nothing to hide. How might a super organized business information process do that, you ask? When a public company is audited, internally and externally, there must be full disclosure on the statements they make to the auditors and their stockholders. Having a system that incorporates the data of the company into one comprehensive collection will help keep the reputation of the company on the up and up. Being able to pull up any piece of information quickly and efficiently and with that data being matched by supporting evidence will give that company, and accountant, full disclosure and from being sucked into the trap of scandal.

III. Revenue Recognition: 

In order for a company to recognize revenue, the system needs to be set up to handle the accrual method. How handy it would be to be able to input a sales invoice and the rest of the process does the work on debiting and crediting the appropriate accounts, putting in orders for the bill of materials, and putting a status on the order all in an instant. As smart as humans are, there is no way that even a small army of accountants and bookkeepers could not be able to turn around information in such a short period of time. At any one point, the accountant of the company ought to be able to generate financial statements and know how much revenue they have generated. Having a computing process that puts it all together in a short period of time will give the accountant and executives of a company an accurate picture of the financial stance of a company about whether or not they are meeting their goals for a fiscal year.

The accounting principles are all applicable in one way or another, but these three can give you the most bang for your buck. If you're an accountant, the choice to use a business data processor or not should be easy for 3 reasons: efficiency, accessibility, and professionalism. 

All three will help your company succeed! 

By: Melinda Leavitt 

TEKOA ERP Software 

Web Portal Software

More Resources 

 
ERP For Manufacturing 
ERP for Midsize Business 
ERP for Small Business 
ERP for Small Business 
ERP for Wholesale Distribution 

Midsize ERP Software

WMS Software

ERP for Manufacturing

 

 

   

Tekoa Software Twitter

Tekoa Software LinkedIn

Tekoa Software YouTube

Tekoa Software Facebook

Tekoa Products

Support

Solutions

Developers / Partners

Legacy Sage 100 Services

About Tekoa

 
   

 Contact Us

 Privacy

 Terms of Use

 EULA

 Copyright Tekoa Software Inc.  All Rights Reserved