Pre-accounting stands out as an indispensable field of activity with the opportunities it offers to businesses. Today, information is one of the most important elements that give businesses competitive power. The more businesses can access information and base their decisions on accurate information, the more they will be able to stand out in the current markets with strong competition. In this respect, it is very important to organize the data obtained by businesses and to use this information in decision-making processes.
Businesses are themselves one of the important sources of information with their transactions. Many activities shaped according to the preferences of the business, such as product choices, pricing, spending policies, inventory management, provide important feedback to businesses as a result. If these transactions can be recorded and evaluated correctly, they serve as an important guide on how businesses will proceed in the future. In this respect, all kinds of transactions of enterprises, regardless of whether they are small or large, should be recorded in a certain systematic manner based on relevant documents.
So what is pre-accounting? How can businesses established in the US fulfill their pre-accounting transactions? What do these transactions bring to businesses? Which support services can businesses established in the US receive in terms of pre-accounting activities?
What is Pre-Accounting?
Preliminary accounting, in essence, refers to the regular recording of all financial transactions made by an enterprise. Recording and categorizing each transaction in a certain consistency enables the enterprise to monitor the revenues and expenses it generates, track the amount of inventory, plan the assets in the cash or bank, and see its receivables and payables as a whole. In this respect, the basic function of preliminary accounting is that it provides the opportunity to evaluate the general view of the enterprise as a result of the complete recording of the transactions made.
From the moment a business is established, it engages in business and transactions of a very different nature. These transactions include the implementation of basic strategic decisions such as investment, financing, profit distribution, as well as daily transactions shaped accordingly. The purpose of each transaction and the way it is carried out affect the business differently. For example, the purchase of a fixture and the purchase of a commodity to sell cause the asset structure of the business to change. Similarly, paying for a purchase in cash and paying for it on credit will not have the same impact on the cash position of the entity. Similarly, cash or credit collections for goods sold, the use of current accounts with suppliers, and the composition of the capital structure affect the entity in different ways. As a result, the results are re-evaluated in the context of these decisions and give an idea about the continuation or modification of the practices.
Two Different Methods: Cash Basis Method and Accrual Basis Method
There are two main methods of recording related transactions. These are cash basis method and accrual basis method. In the cash basis method, the entity considers the transactions on the basis of cash movements and records them accordingly. In the accrual basis method, on the other hand, the entity records the transactions at the time when the transactions become legally effective, regardless of cash flows. In this framework, if a transaction is legally established but the related cash flow will be realized at a later date, an entity that records on the accrual basis records this transaction on that date, while an entity that records on the cash basis records the transaction on the date the payment is actually made. Therefore, depending on the method adopted, the results that the entity will face will differ.
Why is Pre-Accounting Important for Businesses?
Preliminary accounting transactions provide significant benefits to businesses. Preliminary accounting is one of the basic elements in the determinations to be made in terms of the healthy growth of the business. Recording all kinds of financial transactions of the enterprise item by item is very important in terms of determining the current situation of the enterprise. Determining and comparing revenues and expenses, then evaluating the sources of the differences between them, deciding on the improvements and adaptations that can be made within this framework makes a dynamic contribution to the effective management of the business. It gives the opportunity to evaluate issues such as how much profitability is achieved from which product item or which customers have collection problems. Similarly, a number of factors such as how installment sales affect the cash balance of the enterprise and what the inventory turnover rate is can be evaluated in detail. Transactions that are not recorded or recorded incorrectly as a result of negligence or error will result in an inaccurate assessment of the current situation of the entity.
Keeping complete and accurate records within the pre-accounting framework is also very useful in terms of data readiness. Business owners' belief in the reliability and completeness of the relevant records ensures that these data are used effectively and sincerely. In addition, well-organized and up-to-date records will strengthen the business's hand in the event of possible IRS audits.
In addition, records that are kept regularly and are transparent in a way that does not leave room for dispute also contribute significantly to the resolution of potential problems that may arise between the enterprise and different stakeholders such as dealers, customers, suppliers and employees.
Sky Accounting Provides Pre-Accounting Support Services to US Businesses
Depending on the transaction volume of the enterprises, it may take a lot of time to record such transactions one by one. Using relevant software programs provides cost advantages to businesses. Likewise, instead of employing someone related to the subject within the business, receiving support services from consultancy companies offers businesses the opportunity to save time and cost.
Sky Accounting, a consulting firm based in New Jersey, also provides support services to businesses in their pre-accounting processes. In this context, Sky Accounting provides a reliable service to businesses to ensure that the records are complete and accurate by performing the pre-accounting transactions of the enterprises in a professional manner. By receiving direct support services, businesses do not need to employ additional staff for pre-accounting transactions. In this way, it gains the opportunity to carry out pre-accounting transactions at less cost and in a shorter period of time. In addition, Sky Accounting , with its expert staff in the field, evaluates the special situations of the enterprises and helps to determine which of the cash-based or accrual-based methods is more suitable for the enterprise.
You can click on this link to see the other services provided by Sky Accounting in areas such as accounting, tax, payroll apart from pre-accounting.