accounting rules for business

The role of accounting for a business

Last Updated: December 8, 2021By Tags: , ,

Even if Melbourne Bookkeeping Services is complicate and requires the appointment of an accountant, when it is well done, it is a real mine of information for a manager.

Definition and the general role of accounting

By taking care of drawing up the accounts, accounting is above all a strategic management. It is important to have this vision. Each year, the accounting produces at the end of its financial year mandatory summary documents which are the elements of general accounting. In addition, at any time it is able to establish provisional statements which explain the financial situation of the company. The partners (bankers, employees, investors, etc.) of the company are very attentive to this financial situation present by the accounts. The first and fundamental role of accounting is therefore to be a financial information tool. This mandatory function has both financial and legal value.

In an document call journal, all the operations carry out by the company are enter. It is legally binding accounting base on the concept of the annual accounting period. In Australia, accounting is frame by law and by accounting principles, rules and procedures that it is require to respect. This organizational system represents a tool that makes it possible to learn about the assets of a company, and on the other hand to periodically measure its performance.


Important documents that must be kept in the general accounts during the year are:

  • the newspaper
  • the ledger
  • inventory book


At the end of the year (closing), the following elements must be establish:

  • the balance sheet
  • the income statement
  • annex


The accounting year

The period during which a company records all the financial flows relating to it is call the financial year. In other words, during this period, the accountant enters all the entries relate to the activities of the company. If the first financial year does not have a minimum duration, it cannot however exceed 24 months.

At the end of an accounting year, the company is require to establish certain compulsory general accounting elements. These are the mandatory financial statements: the balance sheet, the income statement and the appendix. The tax return is also establish at the end of an accounting year. It is the company’s tax declaration that makes it possible to determine and justify the amount of tax owe by the company: it is submit to the tax authorities.

The law does not impose a closing date for accounting years, so it is at the discretion of the company (with the exception of the liberal professions). However, it is customary for an exercise to last 12 months and extend over a calendar year.


Accounting entry

It is the fundamental subject of accounting. It is the information that records each movement in the accounts. All flows of an economic, commercial or financial nature are write to a file. Each entry has at least two lines, each of which is broken down into several columns. An entry has at least one debit and one credit, which must balance each other.


The require items are as follows:

  • date of operation
  • nature of the operation
  • proof reference
  • impute accounts
  • the amount of the transaction
  • the direction of the operation (debit if use, or credit if resource).


Each accounting entry will in fact be justified by a supporting document without which this entry would be unfound. The link between an entry and the document justifying it must be able to be made by the managers of the company, by the accountant, by the auditor, and by the administration in the event of an audit.