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Fully integrated accounting system
A full-fledged backend accounting system is provided with the ecommerce system. All online transactions will automatically percolate into the accounting system under respective ledgers. You will have a facility to pre-configure your chart of accounts and the default accounts for various customer and order related transactions. Where sales are made in a currency other than your base currency, the accounting system will carry out forex gain/loss computation automatically. You will also have the facility to carry out manual journal entry to record all offline expenses and transactions so as to have your entire accounts in one place.
The accounting process in BusinessAhead comprises the following activities:
- Creation of fiscal years.
- Recording transactions that create assets, liabilities, income and expenses, in the books of accounts such as General Journal/Day Book, Ledgers, Cash Books and Bank Books.
- Accumulating balances pertaining to each type of account.
- Measuring the impact of these transactions on the company's profit or loss.
- Assessing the value of the company's assets and liabilities.
- Communicating financial information relating to the above activities using relevant reports such as trial balance, consolidated ledger balances, vendor accounts payable, TDS payable, customer accounts receivable, credit-ageing, forex gain/loss report, fixed asset chart, COA drill down; and financial statements such as cash flow, profit & loss statement and balance sheet.
BusinessAhead not only performs the activities of traditional accounting and book keeping listed above; but also facilitates management of accounting activities. To enable carry out the above activities, our accounting system is built around the following components:
- Fiscal Years (Accounting Periods)
- Chart of Accounts
- Control Accounts
- Default Accounts
- Payment & Receipt Methods
- Journals & Vouchers
The accounting philosophy of BusinessAhead is woven around:
The accounting function is simplified by integrating it with transaction processing. Accounting entries are created when:
- A final document is created in the sales, purchase, customer return or vendor return processes.
- Payments are received from customers and payments are made to vendors.
- Adjustments are made to inventory.
B. Real time information
You are provided real time information on critical accounting areas such as:
- Customer and vendor balances.
- Amounts outstanding on sales and purchase documents.
- Customer and vendor deposits.
BusinessAhead provides you real time information by automating the accounting process but not at the cost of the advantages that traditional accounting methods provide you. BusinessAhead follows the time-honored concept of entering all transactions in appropriate journals first. Entries are posted to the ledger accounts only when you decide to do so. This allows you to review the entries before posting them to the accounts. System generated entries are automatically posted to ledgers.
BusinessAhead follows the Generally Accepted Accounting Principles (GAAP) when automatically creating accounting entries for sales, purchases, payments, receipts and loss/gain on foreign currency translations. GAAP are rules that govern how businesses measure, process and communicate financial information. These are general principles that act as the building blocks for accounting and help to ensure consistency when reporting accounting information to other users.
The key accounting principles and how they are applied in BusinessAhead are detailed below:
Cost principle: All goods and services purchased are valued at their historical cost i.e., the asset's original purchase price and are displayed on the financial statements at cost.
Serialized inventory is valued at actual cost and non-serialized inventory is valued at weighted average cost.
Objectivity principle: Accounting data must be as accurate and useful as possible. The data should be documented by objective evidence, usually made in an arm's-length fashion between a buyer and a seller. All accounting entries are made on creation of a final document.
Realization principle: A business records revenue when it ships goods or completes a service. In short, when it has done everything needed to complete its part of the transaction.
BusinessAhead records sales only when the items have been shipped and simultaneously reduces inventory for the items shipped.
Matching principle: Expenses incurred in generating revenue must be recorded in the same time period that the revenue is recorded.
BusinessAhead makes a corresponding entry for cost of goods sold while recording revenue on sales.
Materiality principle: All significant items (items that are valuable enough to affect a decision) should be disclosed in financial statements. Such items are relatively important and are likely to influence the decisions of users of the financial statements.
Disclosures in financial statements are at the discretion of management and are beyond the scope of any accounting software. BusinessAhead provides the means to obtain information that require disclosure such as ageing of accounts receivable.
Full disclosure principle: Financial statements and their footnotes must include all relevant accounting information to prevent the financial statements from being misleading. Disclosures in financial statements are again at the discretion of management and are beyond the scope of any accounting software.
Consistency principle: A company must persistently use the same accounting procedures period after period. This is to ensure comparability from year to year. The consistency principle is most relevant in valuation of inventories as different methods of valuation can affect the asset value and expenses. The inventory type determines the method of valuing items in BusinessAhead. Serialized inventory is valued at actual cost while non-serialized inventory is valued at weighted average cost. BusinessAhead ensures that you cannot change the inventory type of an item once it has been used.
Conservatism principle: When faced with uncertainties, accountants must make estimates that neither unduly overstate nor understate the situation. When alternatives exist for recording economic events the one chosen should result in the most conservative short-term result. Thus, there should be a bias to recording a loss or expense and recording an income or revenue should be postponed.