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Answer: An accountant plays a crucial role in financial management and reporting for individuals, businesses, and organisations. Their primary responsibilities include:

  • Financial Recording: Accountants maintain accurate financial records, including income, expenses, and transactions.
  • Tax Compliance: They ensure compliance with tax laws, prepare tax returns, and help minimise tax liabilities.
  • Financial Analysis: Accountants analyse financial data to provide insights into a company’s financial health, profitability, and areas for improvement.
  • Budgeting and Planning: They assist in creating budgets, financial forecasts, and long-term financial strategies.
  • Auditing: Some accountants perform internal or external audits to verify the accuracy of financial records.
  • Advisory Services: Accountants often provide financial advice and recommendations to help clients make informed decisions.

Answer: Accounting encompasses various specialised fields, including:

  • Financial Accounting: Focuses on preparing financial statements for external stakeholders, such as investors and regulators, to provide an accurate view of a company’s financial performance.
  • Managerial Accounting: Concentrates on providing internal management with financial information to make informed decisions and optimise operations.
  • Tax Accounting: Involves tax planning, compliance, and reporting to ensure individuals and organisations meet their tax obligations efficiently.
  • Forensic Accounting: Investigates financial discrepancies, fraud, and irregularities, often used in legal cases and investigations.
  • Cost Accounting: Focuses on determining the costs of producing goods or services, helping companies manage costs and set pricing strategies.
  • Auditing: Involves examining financial records to ensure accuracy, legality, and adherence to accounting standards.

Answer: Working capital refers to the financial metric that measures a company’s short-term operational liquidity. It’s calculated as the difference between a company’s current assets (e.g., cash, accounts receivable) and current liabilities (e.g., accounts payable, short-term debt). Positive working capital indicates a company can cover its short-term obligations, while negative working capital may suggest financial strain.

Answer: No, inactive and dormant accounts are not the same. Inactive accounts typically refer to financial accounts (bank accounts, investment accounts, etc.) that have had no recent activity but are still open and accessible. Dormant accounts, on the other hand, are accounts that have been inactive for an extended period and may be subject to certain legal and regulatory procedures, such as escheatment, which involves transferring the account’s funds to the government if the account owner cannot be located.

Answer: Yes, maintaining accurate accounting records is essential for financial management. Here are some best practices:

  • Use Accounting Software: Invest in accounting software to streamline record-keeping, track transactions, and generate financial reports.
  • Keep Detailed Records: Ensure all financial transactions are well-documented, including receipts, invoices, bank statements, and expense reports.
  • Regular Reconciliation: Reconcile bank and financial statements regularly to spot discrepancies and errors.
  • Backup Data: Regularly back up accounting data to prevent data loss.
  • Segregate Duties: Implement internal controls and segregation of duties to prevent fraud and errors.
  • Stay Organised: Maintain a systematic filing system to easily access documents when needed.
  • Seek Professional Help: Consider hiring an accountant or bookkeeper to ensure accurate and compliant record-keeping.