Accounting is a financial branch that is used regularly in business. Accounting covers actions of collection summarization and analysis of different transaction within business. Accounting is used for those action and after that other financial branches use the data collected to make decisions for the future moves of the company. It is said that accounting is the main branch in finance that is concerned with past and present. Accounting has 4 major branches of its own, financial, cost, corporate and management accounting, but more about them some other time.
If we want to talk about accounting we must mention main features that describe accounting in the simplest way possible.
First feature of accounting is recording. And it is main feature of this art, because it represents recording of all relevant transaction within certain business. Transactions that are recorded must involve business type and money, without those two things data that is collected is useless. One more thing is worth mentioning about recording, and that is the detail in which all transactions are recorded, which is high. All data must be collected with utmost regard to details, no matter how small they may be. Journal nad other subsidiary books are therefore used for this action.
Classifying is second feature of accounting and it represent classification of all data that is collected. It is classified in groups of information ( for example, payments and receipts will always be shown in a cash book ). One common head is used to gather all information that is same or similar and that can be used for same actions in the future. The process of transaction classification is completed with opening of the accounts in the books where data is stored ( those books are also known as ledgers ).
Third feature of accounting is summarization which shows all results of the business from data that already went through aforementioned features. After this step data can be presented to interested parties. Most important thing about this step is that it shows all information about financial statements. When we talk about those statements we think about Trading ( profit/loss account ) and Balance Sheet.
Interpretation of data is fourth and final feature of accounting. It explains profitability of the venture, whether it is good or bad. From this data clear estimation of business performance can be done.
From all of this three clear objectives of accounting can be seen:
Representation of business related permanent records which is done through bookkeeping and general accounting. All transactions are shown this way, and they must be in accord with all rules and regulations.
Profit/loss is found from data gathered through accounting.
You can easily determine business position on the financial level through analysis of accounting gathered data.
A type of accounting can be used in binary options trading, and there are some tries to make software that would do that all by itself. Binary option robots software are that aims at performing all accounting job in as short time as it can be done.
Trading binary options has become a worldwide popular activity. It is available to everyone with Internet connection, and it is possible to execute these trades even if you are not a financial expert, which is what makes this method popular among the people of different educational, cultural and career backgrounds. However, even if you know nothing about trading, it is still necessary to learn, first the basics, and then more complex elements of it. Learning and staying informed is the only way to make binary trading successful, in order not to lose all the money you invest. Trading binary options requires investing at least $250, and if you want accounts other than basic, you will need to invest even more. In order not to lose too much money while you are still in the beginning of your binary trading career, here are some tips on how to save money while you still learn.
First of all, it is necessary to choose a reliable broker. This means that the broker should have a CySEc license (or a license of another authority of your country), that they should have favorable payout percentage and a reasonable payout period. You can find out all the information you need by visiting any review website and read the reviews of the brokers. Also, most of the information are given on the brokers’ websites.
Before you start real trading, it is recommended to practice trading on demo platforms. Most of the brokers offer a demo account to all their users who register and place the first deposit on the account. When you register with the broker, make sure to use this feature in order to develop and/or practice your trading strategy. Demo accounts are available only for a limited period of time, so after your trial period expires, you will need to trade with real money. We suggest that you register with a broker that offers small trading amounts. One of them is Banc de Binary site, where you can invest only $1 per trade, and the minimum deposit is $250. This means that, even if you lost every trade, you would have 250 to execute. This gives you plenty of time and opportunity to further practice your strategy. Some money will be lost, though, but that is a sum that can be neglected, considering the amount of trades you were able to execute.
Lastly, make sure to invest properly and create an investment strategy that will reduce the unnecessary loss. Follow the trading signals and alerts, which will tell you how risky each trade is for investing. Trades with higher risk usually have slightly higher payout percentage, which can be deceiving. Rather than taking a high risk of losing too much money, invest smaller amounts of money in high-risk trades. On the other hand, you can invest bigger sums on low-risk trades, because the chances are higher that you will win. Even if the payout percentage is lower than with high-risk trades, you will still earn money.
Comparing two disciplines and deciding which one is better is imprinted deep down in human nature. Whenever we see two things that are marginally similar we will proceed and compare them and see which bests which. But comparing two things like accounting and economics is wrong because you might get some results, but you would never be able to run a business without one of them because both of them are equally important.
On one side we have accounting which is responsible for recording of all transactions that involve money, while on the other side we have economics which will tell us how to use that money in best possible way with which we will attain maximum possible profit. So in reality one of them can’t function without another. If we focus on accounting only we will have records of all transactions and we will be aware of our profit or loss and we will know how much of it we have, but we will not be able to invest that money in a business or extension of business that will improve our financial situation even more. If we take another situation in which we focus on economics only we will see another effect. We won’t be able to invest money in certain projects due to lack of knowledge of the size of the profit we have. It doesn’t end there because without those accounting reports we won’t be aware of things that bring us money, and therefore even if we had some basic knowledge about our financial situation we wouldn’t know where to send that money and what aspect of our business requires additional money input.
If we approach comparison of accounting and economics from the angle of job opportunities then more can be said about it than explaining how those two can’t be compared. Before I write any more about job opportunities within these two disciplines I would like you to understand what they actually are, or rather where they stand. Accounting is a part of general finance, but it has its own domain in which it operates. Then there are economics which over time got blended with general finance and today only few things are called economics so we will use finance instead of economics when it comes to work. If you take accounting and get a degree in it then you will be able to work as a bookkeeper or any other similar job, whose description involves recording of financial transactions. On the other hand finance degree will allow you to work on an array of positions that will involve making business decisions. More money can be earned on positions with finance degree, but that is followed by greater responsibility those positions have. Accountant will never be responsible for a loss in business ( except if that loss was due to his accounting mistake ), while manager can cause loss while doing his job by making a wrong decision.
Financial accountancy, also known as financial accounting is a huge field of accounting that is mainly concerned with analysis, summary and reports of financial transactions. Information that people from this field of work provide is important for many different factions within the business world including banks, stockholders and similar entities.
Financial accounting has two recognized and accepted objectives. Providing relevant financial information to investors, both existing and potential, or any other entities that are willing to pay to get a hand on that info. And a competitive objective that involves capital maintenance in regard to financial reporting.
Every financial statement produced through financial accounting must comply to several rules:
The information that is gathered must be able to influence decisions. Statements that hold no power over current or future decisions are useless.
The gathered information becomes material if its misstatement or omission can influence decisions of other users, in regard to the financial statements.
Significant error or possible bias must be rooted out of accounting and the reports that it provides. Managers rely on those reports and they should be able to do that without fear. Highly relevant info might be less reliable and managers have to be aware of those things in order to make good decisions.
A report which is written in a form that is not understandable by the party who requested that report equals no report. Due to that every report must be written in form that is easily understandable by the party on which the report is aimed.
All reports must be writt en in same or similar form, so that they can be compared to one another. That comparison leads to decisions that will affect the party that has issued those reports, and therefore it will affect accounting sector of the organization they belong to.
As any other area financial accounting has its own components, in this case they are the components of financial statements, and there are three of them, cash flow, profit and loss and financial condition.
Cash flow statement considers the flow of the cash in a certain and stated time period. This includes inputs and outputs of cash within the company/organization. All other flows that are not concrete cash are disregarded in this statement. All debts that the party owes, or that is owed to them are also discarded from this statement. These statements must be done in time frames so they can be compared to other statements from the past.
Profit and loss statement is used in case of service organizations. End balance of that statement determines whether it is a loss or profit.
Third statement is statement of financial condition. It can be done to evaluate different aspects of incomes or expenses to understand them better and to find what can be done in regard to them.
Some sites, namely sites found in articles like banc de binary review offer some new, cheap and fast financial instruments, as well as software that can calculate even some of those statements, it is imperative not to trust such statements.
Much like a common stock, preferred stocks are issued by company, but the holders of these stocks in most cases don’t have any voting privileged. Instead of that they have priority when it comes to dividends and liquidation residue, both over common stockholders. Investors that are in need of steady income and hate risk will find these stocks appealing. Preferred stocks are issued because they are better than bonds when it comes to dividends and other obligations.
Preferred stocks have bigger rights than common stocks, but creditors come first when it comes to residue of liquidation. The dividends that are given to all stockholders are different between these two stock types. When it comes to dividends holders of common stocks depend on the value of the stocks because that value comes in the play when size of dividends per stock is calculated. But preferred stockholders don’t have to worry about such things as value of the stocks because their dividend rate is fixed on certain amount at the moment they bought them. And in never changes, so their dividends are always same. But it doesn’t means that dividends are guaranteed for those that hold preferred stocks, if a company doesn’t give dividends away and they decide to invest money in something else no stockholder has a right to argue. Preferred stocks are in some ways similar to common stocks, but they may have some additional features no common stock has:
Adjustable rate means that dividend rate of the stock is pegged to current interest rate.
Cumulative feature helps preferred stockholder when it comes to missed payments/dividends. If your stock has this feature and you have missed last dividend then you will have right to gain that payment along normal payment when next payment on dividends happen. That missed payment will have advantage over common stockholders as well.
Convertible feature gives the right to preferred stockholder to convert its preferred stock into a common stock. This allows the owner to reap the fixed dividends, and to jump on rise of the price of common stock and profit from that by converting his stocks to common.
Callable feature allows company to buy back their preferred stocks. Price for which stocks are bought, price printed on stock certificate is used for that trade.
Participating feature which is extremely rare gives extra payment on dividends to its stockholders. Owner of such stock received original fixed dividend plus a percentage of the common dividend payment which can go up to full value of the dividend.
Priority of preferred stocks means that some preferred stock have priority over other preferred stocks when it comes to payments of any kind. Commonly there are three types of this feature in stocks, Prior preferred, first claim and Senior preferred stocks gaining priority as they are listed.
In last few months there is a steady rise of influx of preferred stocks and their options on the different markets like binary options ( 24option.com and others ) due to general rise in interest around these stocks.