by Corporate accounting revolves around maintaining an organization’s financial records in order to ensure that the directed rules are compliance effectively and working procedures are held within the limits of the organization’s rules regulations and policies. Corporate accounting not only benefits the company but also enables the executives in making financial decisions. The Corporate Accountants dealing with all this work are also often referred to as Management Accountants.
It practices the double-entry book-keeping system in which every transaction will be recorded in two accounts which means that the debit account is the one from which money is leaving, and the credit account is to which it is transferred. This branch of accounting requires preparing and consolidating an organization’s financial statements, and ledgers. Ledgers and financial reports are collected from various organizations’ divisions and further, corporate financial statements for company executives are prepared. It is ensured that each division of the organization is covered and they are contributing to the company’s revenues equally.
Activities:
The Creation and Maintenance of a Company Accounting System
Corporate accountants create, install, manage and maintain the corporate accounting system of a company. In modern cases, it is a software platform that spans the entire firm. After installation, the accountants create separate accounts to handle business elements such as equity, assets, income, liabilities and expenses. Having done so, they assign each account with general-ledger codes and set the overall system to record specific transactions into the matching account automatically. In addition to that, advanced corporate accounting involves the regular creation of a variety of reports that are used internally. These reports are made using current data and information. Moreover, financial statements for the company are also produced for the purpose of verification by regulatory bodies.
Managing Accounts Receivable
This type of bookkeeping also handles accounts receivables. This is where they regularly process payments that are coming in from clients. In addition to that, the corporate accountants also handle any cases of default. Corporations can assign large teams of accountants to handle past-due accounts. However, smaller teams can work together with specialist collections agents for the purpose of handling defaulting cases. In this task of corporate accounting, senior corporate accountants also report on the status of mature accounts and ensure that company executive are updated on the cash flow as well as collections efforts.
Special Expense Management
A company is required to make special payments so as to stay compliant with business regulations. Corporate accounting handles this responsibility by making payments such as employee-related taxes, garnishments for wages, distributions for retirement accounts, bonuses for performance as well as payment for overtime. Corporate accounting books indicate that these payments are calculated, managed and paid out by the corporate accounting department.
Processing Payroll for Staff
The calculation of staff salaries falls into the purview of corporate accounting. In this task, the corporate accountants calculate wages for staff according to various work periods. This can be weekly, bi-weekly or monthly. The staff receives payroll checks or direct deposits into their bank accounts courtesy of corporate accounting.
Managing Accounts Payable
Corporate accounting handles the responsibility of receiving and processing invoices that come into the company. The accountants involved than proceed to make payments to contractors or suppliers according to the indicated means of compensation. Examples of these include bank transfers, checks, credit-card payments and electronic wire transfers. When handling accounts payable, corporate accountants normally focus on inventory flowing into the firm. However, they can also focus on loan payments, taxes and premise maintenance costs.
Advantages:
- A corporate entity can raise its amount by selling shares and issuing bonds.
- The shareholders of a corporation have limited liability.
- A corporate company holder can transfer his ownership.
- Owners can also receive tax-free benefits.
- Since the ownership of a corporation can be transferred, it has a perpetual life.
Limitations:
- Due to excess tax filings, it requires a lot of paperwork.
- Generally, in such corporations, paying taxes gets double as the corporation itself pays tax depending on its type and then shareholders pay taxes on the dividends received by them.
