Basically, a general accounting system would count the inventory or track it periodically rather than continually. In other words, the inventory would be counted in one stage then a few weeks or months would go by and the inventory would be counted at another stage. Think about how horrible this data is for management. It is completely outdated and inaccurate. How is management supposed to make decisions and strategies based on inventory numbers that are always out of date and inaccurate? That is why more companies are moving away from traditional general accounting systems.
In a nutshell :
- Regardless of the size of a business, accounting is a necessary function for decision making, cost planning, and measurement of economic performance measurement.
- A bookkeeper can handle basic accounting needs, but a Certified Public Accountant (CPA) should be utilized for larger or more advanced accounting tasks.
- Two important types of accounting for businesses are managerial accounting and cost accounting. Managerial accounting helps management teams make business decisions, while cost accounting helps business owners decide how much a product should cost.
- Professional accountants follow a set of standards known as the Generally Accepted Accounting Principles (GAAP) when preparing financial statements.