Accountants see what we call “the trail” in all kinds of businesses. From restaurants to HVAC, construction to pawn shops, and insurance to clothing boutiques, their books write the story. Accountants get to comb through those books every day. We place each expense in the category it belongs and each income item in the correct revenue category. This work is called “general ledger”. General ledger is the main work that produces all other accounting reports like profit and loss, balance sheets, and cash flow statements. If the general ledger work is not done properly and precisely, the reports and statements won’t tie out and balance like they should.
They all work together and should dovetail when all expenses and income is entered. If one expense is posted wrong, or one piece of income doesn’t make it to the right line item, the rest of the reports will not tie out correctly. Accountants do all of this work throughout the year so that they can produce a profit and loss statement, and a balance sheet in order to then create a tax return. If all the work is done properly throughout the year, producing the tax return is a breeze. There’s no questions where expense a, b, or c came from or went to. It’s all right there on the profit and loss (or P&L as we call it) and the balance sheet. And since both reports tie out, we know we can be confident in what we enter on the tax return.
But accounting businesses don’t come without a price. The pens, pencils, envelopes, postage, paper, file folders, calendars, software, etc. that is needed in order to take care of our clients is greatly needed. Thankfully, all of our office and shipping supplies can be bundled into cheap boxes and sent directly to our office overnight. The business chain is something to marvel at. Business constantly takes care of the needs of other businesses.
A farmer for example, provides the resources a restaurant needs to feed people. The restaurant is good at feeding people, but not good at the upkeep it takes to run a business. So, they call on an accountant to run the other side of the business. Accountants file reports, produce tax returns, process payroll, package up their shipping supplies, and generate reports that show the restaurant how they’re doing. But the accountant couldn’t do all that without the office supply company providing resources in order to get the job done.
