Stewardship

One of your principal roles as bookkeeper (whether or not you are also the company's owner) is that of steward over the assets of the company. What this means is that your job is to account for the company's assets and any changes to those assets. You are report­ing this information to four major users of the financial statements:

Owners: The company's owners want to know exactly what the company owns and how much profit it has made. It's easy to understand why they want this information. Ultimately, they are the beneficiaries of the assets and the profits. Their goal is to make sure that the assets are still there within the company, producing a lot of profit.

Investors: Many companies have external investors who invest money in the corporation in exchange for a share of the profits down the road. They have the same goals and the same need for information as the owners do.

Lenders: During the start-up period, most companies have to borrow money to operate. The lenders of this money may be banks, other companies, or individuals. The lenders' concern is whether or not the company will be able to produce enough money to pay them back. They want financial information that shows them what the company's assets are (in case the lenders need to foreclose on them), what other types of debt the company has, and how much the company is making and paying out to the owners.

Taxation Authorities: In the us, this body is the IRS; in Canada, it's Canada Customs and Revenue Agency; and in the UK, it's Inland Revenue. No matter what it's called, the government is very interested in your company's financial information. It wants to make certain the company (or the owners, if the company is not incorporated) pays tax on all the profit and capital employed in the business. They're most interested in the recording of revenues and expenses.

It's from these numbers that the taxation body derives its own income. As you can see, the bookkeeping information that you produce will have many users, and they all have different needs and goals. It's important for you to track the accounting cycle in such a way that all users' needs are satisfied. Doing so will also help you give your company's managers information to help them make better decisions.