It is always necessary to organize accounting of your business in Dubai. Accounting is the study that establishes the rules and procedures to record, quantify, analyze and interpret economic events affecting the assets of any organization, providing useful, reliable, timely and accurate information, which aims to ensure financial control, evaluation of the entity and support in decision making.
It is based on a set of procedures that can be learned, establish rules and procedures. There are some instructions that are of universal application to be interpretable by all and comparable between one organization and another.
With proper accounting, you have financial control and if you know what is happening, you can make good decisions. For evaluation of the entity, the records that meet all of requirement deliver an accurate radiography of the reality of the business, which is fundamental to relate to banks and other entities. The control and evaluation allow to make decisions that are not random or based on intuition. Accounting has 3 main tools to keep records orderly which are as follows;
1 – Cash Flow
It is a state that represents the movement of money of a company during a certain period. It consists of the initial balance, plus the income in a period i.e. sales, credits, capital contributions, etc. and less the expenditures of the same period (expenses and investments).
It is recommended to carry cash flow on a daily basis. It is also very helpful to prepare a projected cash flow to see if you have enough money to pay all the costs of your company throughout the year. To do this, you need to have a sales and spending projection.
2 – Income Statement
The income statement is the final result after having added up all that the company sold and having subtracted all the expenses incurred in generating those sales. When the result is positive, there is profit. When it is negative, there is a loss.
It is important to note the difference between the results. The cash flow shows is how the cash comes in and goes out and it is shown in income statement as the income and expenses of the business.
3 – Balance Sheet
In accounting, the balance sheet is the statement that reflects the state of the assets of an entity at an established time. It is a picture of the company at a given date, for example, on December 31, 2016. The balance sheet is structured through three concepts as the following;
These are the resources that a company has, for example, cash in hand, accounts receivable, machinery, property, etc.
They show all the obligations acquired that contribute to the operation of the business, for example, accounts payable, bank loans and long-term debt.
It is the difference of the Assets minus the Liabilities and represents the contributions of the owners or shareholders plus the undistributed results. If we add all the assets and we subtract what we owe to third parties, the difference that remains is the patrimony that is the contribution of the owners.
To have smooth operation regarding your business accounts, you are supposed to hire the professionals and one of the best accounting firms in Dubai.