Meaning of Financial Accounting Part VII
6. What is a billing period?
The accounting period is the period between two closings. This means that an accounting period can lie between two annual accounts, but it is also possible to close quarterly or monthly. Then the billing period is not a year, but just three months or just four weeks.
The accounting period is important for the seamless and clear documentation of all business transactions . When a billing period ends, all accounts are closed. They can no longer be changed. Conversely, this also means that the bookings can no longer be adjusted. Once the billing period has ended, the data is sent to the tax office or the tax office. Certain deadlines such as the 10th of each month are decisive when it comes to submitting the advance VAT return. Without a permanent extension , the reports must always be received by the tax office by the 10th of the month following the billing period.
7. Financial accounting using Excel tools
Small companies in particular often do not see the need for accounting software, but they also do not want to do their accounting on paper. Excel offers excellent options for this and various tools that are just as helpful for financial planning and the determination of the operating result as for creating an order book.
- Excel Tool Operating Income
This tool calculates various key figures. These include profitability figures, asset and liquidity figures. These are each provided with explanations and are shown in the profit and loss account and in the balance sheet in a multi-year overview. An assessment of the company can be derived from this.
Important: A bar or line diagram can be created for each key figure, which makes the comparison much easier.
- Excel tool for financial planning
This planning tool proves to be pleasantly comprehensive and guides the user step by step through the planning: Sales and turnover, personnel and total costs as well as investments can be planned with it. In addition, a liquidity plan is drawn up, plus a budgeted balance sheet and budgeted profit and loss account. The tool can be expanded and adapted as required by the user so that it can be adjusted to individual needs. In addition to entering actual data, a target analysis can also be carried out, and previews for the income statement are also possible.
- Excel Tool order book
As an Excel tool, the order book is primarily aimed at freelancers and small entrepreneurs and records all the information that is important in the company’s day-to-day business. It’s about accepting new customers, managing master data, articles and dates, order values and processors for individual orders. The entrepreneur can also have an article and customer analysis carried out. The tool is a valuable work aid and can be individually configured with just a few clicks.
8. There is also an easier way: software for financial accounting
According to Definitionexplorer, financial accounting doesn’t have to be a book with seven seals. Anyone who does not want to rely on their own knowledge, but rather on the “specialist knowledge” of a software, is taking an important step towards the legal certainty of bookkeeping . Digital accounting has numerous advantages and, in addition to legal security, means, above all, greater time savings in everyday life. Search costs are minimized because the necessary documents can be found quickly based on defined keywords. Digital accounting also brings cost savings . Because the vast amounts of paper and toner used are significantly reduced and fewer storage rooms and administrative staff are required.
Anyone who has to work with the relevant documents can have access to the software. If accounting data is stored in the cloud, access is even possible from anywhere in the world (internet access required). Invoices and incoming payments are automatically compared thanks to the software, and dunning procedures can also be initiated in this way. Furthermore, it is easier to work with the tax advisor , because he or she has digital access to the company’s data.
However, there are also disadvantages to digital bookkeeping. The existing documents have to be scanned in and stored in the appropriate file folder, which means a certain administrative effort. However, this disadvantage only becomes apparent during the transition from the manual to the digital system. During this time, however, not only do you have to work extra, but also higher costs. In addition, various processes need to be redefined. For these, in turn, employees should receive appropriate training or instruction.
9. Summary of financial accounting
The processes of a company are summarized and documented in the financial accounting. Financial accounting – Fibu for short – is just as important for internal information as it is for issuing external invoices. It is also used to determine the company’s profit. It is possible to keep the books using a table in Excel or (much easier) using accounting software . The latter helps with the creation of offers and invoices, reminders and the monitoring of incoming payments. In addition, the software ensures that business transactions are booked in a legally secure manner and that all statutory deadlines are adhered to.