Importance of Accounting

This Article Is Also Applicable For:
  • Benefits of Accounting
  • Necessity of Accounting

The role of accounting in any business concern is very important and reserve as vital tool of business operation. It is easy to focus on the mass financial environment by using proper accounting strategies.

Below we are going to discuss importance of accounting from various views…

1. Recording Transaction
Accounting process records all the transaction and their history. For this, it can’t be loss any transaction data from such record store.

2. Knowing Profit Loss
After a financial period, accounting creates financial statements such as profit and loss A/C, Income Statement, Balance Sheet etc.

3. Identification of Financial Status
Occasionally or to be said more clearly periodically, Business related parties want to know the financial status of the business. Accounting helps and informs the financial status by creating various financial statement such as income statement and balance sheet.

4. Business Operating
Accounting helps management by supplying necessary accounting information to operate business accurately and tactfully.

05. Cost Control
Accounting helps to control cost. Cost controlling is easy because of accounting. We know that accounting keeps all the financial records. It is easy to control cost because accounting provides financial status of business enterprise.

06. Finding Errors in Accounts
Accounting finds out all the errors which are included on accounting information and correct them. By this way, accounting helps to find out errors and fraud in accounts.

07. Presenting Report
After creating financial statements such as income statement, balance sheet accounting supplies to internal and external accounting information users.

From the above discussion, we can say that to operate a business accurately, it must need to have a strong accounting information system. Without accounting the existence a business organization can’t be imagine.