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Accounting Notes

Corporate Accounting Notes:

Meaning, Process, Detailed
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Corporate Accounting is considered as a special

branch of accounting dealing with the accounting for
companies. Corporate accounting usually involves
the preparation of financial accounts and cash flow
statements. It also involves the company’s financial
statement analysis and their interpretation.

Corporate or Company Accounting is one of the most

fundamental and important topics as far as
accounting exams and practical knowledge is
concerned. Accounting aspirants are expected to
have an understanding of the topic with respect to
its meaning, advantages, limitations, uses, and so
on.

Hence, the following study notes on Corporate

Accounting is intended to guide such accounting
aspirants with the most relevant and accurate
knowledge on the subject. Let’s begin with knowing
what is corporate accounting as a concept.

Check here: Generally Accepted Accounting

Principles for SSC notes!

What is Corporate Accounting?

Accounting, also known as bookkeeping, is an
activity involving the collection, analysis,
classification, validation, interpretation, and
presentation of financial data of the company. Every
corporate entity performs accounting activities in
order to identify its financial standing. This is where
corporate accounting comes into play.

Corporate Accounting is one of the many types of

bookkeeping. As the term suggests, it is especially
undertaken by corporate entities in order to evaluate
their financial status in a particular duration.

Corporate accounting involves several processes

such as preparation of cash flow statements,
balance sheets, financial records, and so on. It is
also a functional tool to analyse corporate business
activity such as amalgamation, absorption, and
creation of consolidated documents.

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Definition
The process of corporate accounting is dedicated to
the financial operations of a company. In such a type
of accounting, the corporate accountant is only
concerned with the financial records of the firm.

The term can be technically defined as a “normally

performed activity so as to ascertain the financial
and operational status of a company”.

Do check: Introduction to Financial Accounting for

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Need or Importance of Corporate

Accounting
As we see, company accounting is a very essential
activity as far as corporate entities are concerned.
Companies undertake the activity of accounting in
order to analyse their financial position and predict
future business decisions. The activity is also
important to:

Communicate the position of assets and

liabilities of the firm to the stakeholders
Ensure that the financial activities comply
with the laws and regulations of the governing
bodies
Generate reports for the management to
make strategic decisions for the company
Stay in line with the organizational policies

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Advantages & Disadvantages of

Corporate Accounting
Maintaining corporate books of accounts brings
about several advantages and disadvantages with
the process. Let us have a quick look at the positive
and negative sides of corporate accounting as
below:

Advantages Disadvantages

Creates/ monitors budget Considers only

monetary terms

Tracks business expenses Accounting data

may be biased

Monitors financial position Manipulation of

of the company accounts

Facilitates audit Restrain of

accounting policies

In compliance of law Ignores time value

of money

Assists in business Redundant

decisions paperwork

Effective management Excessive tax filings

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Steps Involved in Corporate

Accounting
The process of corporate accounts keeping is
generally performed by the accounting department
of the company. They are directed to manage the
financial position of the firm under the CFO (Chief
Financial Officer) or an executive of the same level.

According to the corporate accounting guidelines,

the accountants undertake several duties for
maintaining financial accounts and the subsequent
financial reporting. The steps involved in corporate
accounting include:

Creation and Maintenance of Company

Accounting System

The process of company accounting begins

with creation, installation, management, and
maintenance of the accounting system of the
business entity.
Most of the modern businesses of today use a
software platform to take care of these steps
in the process of accounting.
Advanced corporate accounts also involves
creation of several reports as well as financial
statements for internal usage.

Processing the Staff Payroll

Maintaining company accounts also

encompasses the calculation of staff salaries,
wherein, accountants calculate wages for
employees as per the work periods.
The staff receives payroll checks or direct
bank deposits as per the corporate banking
guidelines.

Management of Special Expenses

Company accounting also handles the special

payments that the companies are required to
make in order to remain compliant with the
business norms.
These special payments include employee-
related taxes, distribution of retirement
accounts, performance bonus, overtime
payment, garnishment for wages, and so on.
Oftentimes, the books of company
accounting also feature Journal Entries
indicating these payments that are
calculated, managed, and paid by the
accounting department.

Handling Accounts Payable

The accounting department of a company

also handles the responsibility of receiving
and processing the incoming invoices.
The accountants make payments to the
contractors or suppliers as per the
predetermined mode of payment.
Some of the most common accounts payable
are bank transfers, credit-card payments,
cheques, and electronic payments.

Handling Accounts Receivable

It is an inevitable part of company accounting

as accounts receivable is where regular
payments are processed from clients.
Corporate accountants also handle cases of
bad debts and defaulters alike.
In huge companies, large teams of accounts
are assigned to handle overdue accounts
while smaller teams are involved in specialist
collections agents for handling default
accounts.

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Corporate Accounting for Practical

Purposes

Now that we have seen all the basic concepts about

the topic, let’s understand company accounting for
practical purposes as well. Accounting aspirants
must take note of the following points:

Essentials

Basics of accounting
Accounting standards
Issue of debentures
Shares and debentures
Issue/ forfeiture of shares
Redemption of preference shares
Redemption of debentures
Company amalgamations
Valuation of goodwill

Qualifications

Bachelor’s degree in finance or accounting

OR
Certified Public Accountant

Duties

Accounting
To handle daily operations, track revenues
and expenses, balancing the books, payment
of bills, payroll, etc.
Finance
To analyze expenses and revenues to ensure
effective use of capital, advising companies
on project costs, making capital investments.
Financial Statements
To prepare and consolidate the company’s
general ledgers and other financial
statements.
Budget Preparation
To prepare a yearly budget for each
department to meet the financial and
organizational goals of the company.

Benefits of Corporate Accounting as a

Career

Opportunities for career growth and

development
Competitive pay range
Ability for entrepreneurship
Gaining a better understanding of business
law and taxation

You might also be interested in: Income and

Expenditure Account study notes!

That’s all on Corporate Accounting study material for

aspirants seeking a career in accounting. For more
such study-related resources and in-depth
knowledge on competitive exams, get our Testbook
App today! Take advantage of more than hundreds of
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Kaizen Costing

Environment Audit

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Basics of Accounting Theory

Partnership Accounting

Corporate Accounting FAQs

What is corporate accounting?

Corporate Accounting is considered as a

special branch of accounting dealing with the
accounting for companies as it involves the
preparation of financial accounts and cash
flow statements.

What is the need for corporate accounting?

What are the steps involved in corporate

accounting?

What does corporate accounting include?

Who prepares corporate accounts?

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