An accountant is an individual that tracks the expenses of a company, in addition to preparing, analyzing, and verifying financial documents. He/she helps to find ways to make a company operate more efficiently, by keeping proper records and ensuring that all obligations are met in a reasonable time.
2. How do I become an accountant?
To become an accountant, it is recommended that an individual becomes certified. The three main certification courses are:
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ACCA (Association of Chartered Certified Accountants) the qualifications are two (2) GCE A' Levels, three (3) GCE O' Levels, including Mathematics and English, and the applicant must be at least 18 years.
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CAT (Certified Accounting Technician) – you must be at least 16 years old or above to register, but there are no formal academic qualifications necessary.
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CPA (Certified Public Accountant).
3. What are the primary statements?4. What does a balance sheet represent?
A balance sheet is a snapshot of a business’ financial condition at a specific moment in time, usually at the close of an accounting period.
These are economic benefits owned by the company. There are two types of assets, as follows:
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Current assets are those assets owned by the company that are expected to be converted to cash or used within the current financial year. These include cash, investments, inventories, and accounts receivable.
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Fixed assets are those assets acquired for use in the operation of the business. They are held for the long term, and are subject to depreciation. These include property, plant, and equipment.
These are obligations/debts (monies owed by the entity). There are two types of liabilities, as follows:
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Current Liabilities are obligations, which become due within the current financial year, for example, Accounts payable.
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Long term liability is future expenditures associated with current obligations that are not payable within the current operating cycle.
7. What is a Statement of Cash Flow?
A Statement of Cash Flow represents cash receipts and cash payments of a business during a period. It helps to indicate the business’ ability to generate future cash flows, meet its obligations and its possible need for external financing.
8. What is an Income Statement?
Also known as a profit and loss account, it is a summary of a company’s profit or loss during any given period of time. It records all revenues for a business during this given period.
9. What are the main components of an Income Statement?
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Sales – this represents the amount of revenue generated by the business. The amount recorded here is total sales, less any product returns or sales discounts.
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Cost of Goods Sold – this represents the costs directly associated with making or acquiring the product(s). Cost includes materials purchased from outside suppliers used in the manufacture of your product, as well as any internal expenses directly expended in the manufacturing process.
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Operating Expenses – these are the daily expenses incurred in the operation of your business, for example, selling, general, and administrative expenses.
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Total Expenses – this is a tabulation of all expenses incurred in running your business, exclusive of taxes or interest expense.
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Net Income before Taxes – this represents the amount of income earned by a business, prior to paying income taxes.
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Taxes – this is the amount of taxes owed to the government.
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Net Income – this is the amount of money the business has earned after paying income taxes.
10. What is the difference between an accountant and a bookkeeper?
Bookkeepers, like accountants, are financial record keepers. However, unlike the bookkeeper, an accountant has the responsibility of auditing and inspecting financial records for their clients, prepares financial and tax reports, and must be accredited by an institution or organization.
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