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Understanding The Transportation Accounting Standards

Even though the accounting basics are the same, each industry has different accounting requirements. The accounting requirements for the fashion industry might not be the same as the automotive industry. Likewise, the accounting requirements are quite different for small businesses and large businesses. The transportation industry is one such industry, which has to deal with freight bills, accounts receivable, payables, invoices, etc. A transportation company has to follow certain best practices to cope with increasing demand and pressures, and that is why a good accountant is needed to handle all the transactions. For a transportation company, rather than going to an in-house accountant, it is better to opt for online accounting services as they can provide you with the required information whenever you ask.

Companies that come under the transportation industry, such as railways, cruise liners, trucking firms, shipping, and airlines, face many accounting and operational challenges that affect their total earnings. Therefore an accountant must follow certain best practices while performing transportation accounting. They are-

• Transportation companies should recognize earnings only when the criteria as per the contract have been met with the customer. All performance obligations expected of the transportation or the shipping company will be outlined in that contract. The revenue or the earnings is recognized only after the control is transferred to the customer and also depending on the nature of goods and services.
• It is important to prepare the account statements such as budget forecasts, income statements, cash flow statements, etc., at frequent time intervals or at least every month. Transportation companies deal with huge amounts of money. So it is important to control the transactions and manage the same to control the finances and any risk relating to it. Virtual accounting services can keep up to date accounting transactions so that you can make decisions promptly.
• IASB issues the International Financing Reporting Standards, and it gives guidance on how a company should prepare their financial statements in a true and fair form. The IFRS follow a principle-based approach which is regarded as an accounting best practice. The logistics and transportation company should adhere to the accounting standards as they do many international businesses.
• Many companies depend on the outdated accounting software to prepare financial statements. However, it is recommended to use the recent accounting software to generate the reports accurately in the transportation industry.

Responsibilities Of An Accountant In A Transportation Company

Here are the reasons why an accountant is needed in a transportation company.

1. Business Performance Analysis

A transportation company’s budgetary records explain the money needed or budgeted for specific operations. An accountant can help you understand the financial status of your company. They can keep your books of accounts up to date and help you keep track of the net edge, costs, etc. They will help prepare the budget for your current year operations by analyzing the business performance with the past bookkeeping records.

2. Helps In Managing Expenditure

Accountants helps with corporate techniques, gives timely advice, also helps in finding ways to cut off costs wherever possible. A proficient accountant will have oversight over the things connected to the company’s finance-related wellbeing.

3. Helps In Decision Making

A good accountant keeps all your records updated, and whenever you need the financial statements, they can submit those statements without any delay. The accountants prepare the financial statement frequently so that they can identify if any error had happened while recording the transactions. Transportation companies deal with high volumes of money because of the nature of the business they do. With the right accountant, the companies can take accurate decisions based on financial documents.

4. Regulatory And Reporting Compliance

In the transportation industry, the companies have to follow certain government rules and regulations as sometimes companies do international transactions. While performing the audit, the accountant can ensure that the auditor gets all the records that show that the company adheres to all the requirements set by the government regarding the transactions.

Like every other industry, the transportation industry also needs an experienced accountant to record their transactions, verify them, and submit them for approval. They help you track your income and expenses and thus by helping you make the right decision for your businesses. Continue reading