Why Is Inaccurate Accounting Important

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Small business owners often scratch their heads every time that they have a check bounce or a bill not get paid. They think that they are handling things well, so it comes as a big surprise when they find out that their accountant wasn't doing a very good job of handling things. Inaccurate accounting can cost a company a fortune to fix. It also wastes time and leads to bad business decisions, since it is difficult to have a true financial picture when you are going by the wrong numbers. The trick is to start thinking like a large company does. They have a lot of different preventative measures in place to ensure that they get correct numbers to work with all of the time. Read on for three of them that you should start implementing today.

Checks and Balances

A good accountant will refuse to be a signer on a bank account for the company that they work for. The reason for this is they know that it interferes with a good checks and balances system. Accountants should provide the business owner with a list of all of the expenses and bills that need to be paid on a cash flow statement that includes the current bank account balances. The business owner should have the final say as …show more content…
This ensures that no one can go back and make changes later on. The reason that this is necessary is because someone might make a change to a previous entry by mistake or to cover up their fraudulent activities. These changes ripple through all of the entries that were made after that, and no one else would be the wiser. To begin end of the month closing procedures, you should wait until the first day of the next full month. Then, keeping going from there. Be sure to also change your accounting software settings, so the software won't allow anyone to make changes once a month has been closed off. Some types of software allow this feature to be locked with a password to prevent anyone from attempting to change
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