Accounting In Personal Accounting

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In this essay, the definition of accounting will be described and the three products of accounting and bookkeeping that are the most valuable and useful in the planning of personal finance will be identified. It will also be made clear how financial software helps you in your personal financing. Accounting is a very important and core department at any organization. Without a well ran accounting department, many organizations and businesses cannot function successfully. According to Investopedia accounting is defined as being “The systematic and comprehensive recording of financial transactions”, which includes summaries, analysis and reports of financial information, which includes assets and liabilities and profits and loss for a giving…show more content…
According to Siegal and Yacht (2009), the balance sheet in personal finance is “’a critical piece in assessing the current situation... Often referred to as the “statement of financial condition”… it is the snapshot of what you have and what you owe at a given point in time”. This balance sheet lets you know what to borrow against, what you need, and what you have to potentially discard and sell. Information gathered from the text is that balance sheet is not a record of performance over a period of time, but it simply is a statement of where things are at a specific moment. According to Siegal and Yacht (2009), “Income statement in personal finances is recorded as what is earned as wages or salary and as interest or dividend. Expenses are the costs of things consumed in the cost of daily living in a nutshell the cost of sustaining you while you earn income,” so an income statement informs you of what you have made and lost during the fiscal year, which can help you budget and also prepare you to file your personal income taxes. The cash flow on the other hand is a statement that tells you exactly what amounts of cash was moving in and out of your checking account or some similar account. This account ignores credit; helping you see what money you literally lose and gain during a…show more content…
Some of these software are Quicken, Money dance, Ace Money, iCash Etc. This software’s can help improve the organization of ones financial data monthly, quarterly and yearly it can also help classify, sort, and report ones financial data. This would allow one to clearly view their financial situation better and understand every detail of it. Although the software cannot replace human accounting experts who will be able to render valuable and sound judgment on you personal financial situation, but it can allow you to hire the experts just to make judgment but not to use them in arranging all you data and even spend more money in that process. So the personal financial software can assist you by helping you maintain the above accounts, and also provide evidence to help support you when filing taxes or seeking out bank
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