Stuff you need to know as an Accounting Clerk
A. Accounting is based on balance and primarily the balance of money. What makes an accounting person more familar with a certain business is his or her understanding of this money balance. The need to understand what is the right balance of a certain business activity i.e your credit card statements or sales acitivities is why accounting specialization is needed. If there was no need to understand these balances then accountants wouldn't be needed and this is the case for smaller businesses with few transactions.
B. A business normally needs two primary financial statements, the profit & loss and balance sheet. To create these two statements, double entry is used. Double entry is simply the format you use to create these two statements. Now-a-days this format is implemented by accounting software like Quickbooks.
C. When dealing with a set of accounting tasks, your job should ultimately culminate in processing information or balances in some form. As simple as this sounds this is normally a tiresome process especially if you don't know a business well. For example corperations may require having a bank account for all it's transactions, you need to match these bank transactions to a movement of money for the business as recorded by the business. To simplify what processing meanss imagine you have your own business which sells items online. You want your records to reflect the sum of all your activities therefore you need to aggregate all this information and create a clear picture of all relevent transactions. In order to aggregate this, you will need to account for all orders, confirmed sales and deliveries. If you find that there are more deliveries then orders then something is wrong as this should not happen.
D. Processing may sound easy for your own business but for larger businesses this may be more complex. Businesses with hundreds or thousands of transactions a year requires staff to update this ledger accurately. The sales ledger for example should include information to orders, sales confirmation and payment date. This ledger would normally appear on Excel and be easily understandable by the accountant. A business's expenses for it's operations such as accounting fees, salaries and rent should also be tallied so an accountant can easily verify payments made are of the right amount.
E. What constitutes "the right amount" is based on terms of a business activity's contract or common sense. For example if you have a staff that works for you through the whole year an accountant would expect the staff to have a twelve month salary plus maybe a bonus. If the salaries are paid more frequently and in different amounts the accountant would want to identify the reasons for this. He would also need to communicate with the business to identify the said reasons.
F. The three fundemantal types of records are bank statements, ledgers and source documents.
Bank statements are important because it confirms all the "actual" movement of cash in your business's bank accounts. You would not know if you really physically recieved money for your business activities until cash goes in your bank account. The cash that goes out should be matched with all your spending relevent to the business or money you take out for your own use.
Ledgers are important because it sums all your business transactions and most companies nowadays use excel for these tasks. For example if you sell souvenirs online, your ledgers would include inventory purchases, sales of goods, money owed to debtors, credit provided to customers and so on. For a small sole trader you could either record this physically on paper, on an app or with documentation such as emails. After some time you should likely put this information on Excel to aggregate this and to compare and analyze results.
Source documents are the information that makes up the ledgers and normally come in the form of receipts, invoices and so on.
G. The job of an accountant is to summarize all the data relating to the transactions and check that they are correct. Normally they would input all the ledgers transactions into an accounting software. They would check for annomilies such as double counting which is far more difficult to track if a business does not have numbered transactions which differentiates different cheques and source documents. If a business has a highly disorganized process of recording, an accountant's job is to organize these data in most relevent way. If a business has a highly disorganized set of ledgers with no way of confirming they are accurate balances, then the convention of what the business says, goes. I.e As the accountant cannot verify the records he or she assumes the information is correct.
H. If a company has a ledger, the account may want to check that all source documents are recorded in the ledger. Once this is done and the ledger amount is confirmed, an accountant would want to confirm the ledger amount against the bank statement. Any deviations and amounts that do not match should be verified.
I. Once this is all done the profit & loss and balance sheet are drawn up. The convention that is normally applied is that the bank statement serves as the source document for the quick book or other accounting software entries accounts. However for sole traders this is simply done by inputting their in - house ledgers. If a bank account serves as the primary source of information for your accounts, you must reconcile the balance of your bank with your quick book accounts.