CORPORATE ACCOUNTING | ACCOUNTANCY &AUDITING|L-12|

What is Corporate Accounting? 

Corporate accounting refers to the process of recording a company’s financial transactions. It is a process of documenting expenses, incomes, sales and purchases over a specific time period.

The end result of this process are financial statements like the cash flow statement, the income statement and the balance sheet. 

There are many different kinds of accounting – tax accounting, cost accounting, management accounting and more. Corporate accounting is one of these branches that help create the big picture of how money moves. 

Let’s take a deeper look into the importance of corporate accounting.

Importance of Corporate Accounting

Corporate accounting is critical to the successful functioning of a business.

Registered businesses are required by law to disclose their finances to the concerned regulatory body – in India, this would be SEBI or the Securities & Exchange Bureau.

Corporate accountants help businesses maintain these financial statements according to the compliances and laws of the land.

Corporate accounting helps businesses communicate important financial information to stakeholders.

It forms the base for management accounting, which helps managers make well-informed decisions for the business.

Process of Corporate Accounting

Create Company Accounting System

The first step in the corporate accounting process is to establish a system to record financial transactions.

In today’s era of digitization, most businesses opt for accounting software to automate accounting. There are many accounting tools on the market, like ZohoBooks and Tally.

Fintech tools like RazorpayX even offer current accounts with direct integrations to accounting software.

Learn more: Accounting Integrations with RazorpayX

Record Transactions

After the accounting system has been established, the next part of the process is to begin recording transactions. All transactions – sales, expenses, investments, loans, income and purchases are recorded first as journal entries, then put into the ledger book.

This process is made significantly easier with accounting software, especially if your business has a current account directly integrated with accounting software.

Payroll Management

All aspects of payroll management fall under the purview of corporate accounting. Corporate accountants calculate employee salaries, benefits, taxes and compliances. They also ensure that these expenses are accounted for in financial statements.

Special Expense Management 

The management of special expenses also falls under the purview of corporate accounting.  In order to be compliant with business regulations, firms are required to initiate special payments like performance bonuses, employee-related tax, payment for overtime etc. 

Such responsibility is maintained under corporate accounting. The accounting book reflects that the payments are computed well, managed and cleared out on time.

Accounts Payable Management

The corporate accounting department also regulates the receiving and processing of the company’s incoming invoices. Based on the predefined payment mode, the accountant proceeds to clear out payments to the suppliers or contractors. Common instances of accounts payables are credit card payments, electronic payments, bank transfers etc.

With RazorpayX, it has become convenient for businesses to clear their payables and improve their financial condition. Offerings like the RazorpayX payroll facility enables businesses to automate payments in advance, offer insurance plans to employees and streamline business operation.

Accounts Receivable Management

Corporate accounting also deals with accounts receivables where accountants manage the payments that are coming from the client’s end. Further, instances of bad debts and defaulters are managed by a corporate accountant. 

In well-established companies, a big team of accountants are assigned to deal with past-due accounts and secure business funding. Accounts receivables include payments, loans, purchases etc.