While accounting may be a tough field it has a lot of benefits in the real world, especially in the business society. You should choose to study accounting if you want to establish an effective business or be a part of it. This field of study is also open to those who have businesses and want to enhance its progress.
Do not worry about how you will manage work and studies, with a little accounting essay help from your fellows and professors you can graduate with flying colors.
If you are still not sure about how important accounting is for a business’s growth, then keep on reading to find it out.
Basic Introduction to Accounting
Accounting is considered to be the language of business. It teaches you the process of identifying, measuring, and communicating economic information. It allows users of the information to make informed decisions and judgments.
The information provided is primarily financial. Accounting is also a way of measuring and communication utilized to give reports on the activities of business organizations, seeking profits.
Accounting is important for many stakeholders when it comes to making economic decisions. For example, stakeholders use accounting information which includes management, government, shareholders, suppliers, tax authorities, and much more, all the time.
Importance of Accounting in Business Progress
Every business needs to plan a budget. It helps every business to develop strategies, save money and take notice of any expenses that are out of the budgeted amount. To come up with the budget of a certain business, the company needs previous records of their expenditure and profits.
This is only possible if the company’s records are maintained through accounting. This is because accounting forms the foundation of planning and making budgets.
Bank and Loan Lenders:
In order to get loans from a financial institution, the company needs to provide a financial statement.
The majority of the banks will ask a business to provide the balance sheet, profit and loss statements, cash flow statements, income statements, assets and liabilities, tax paid, and other financial projections. You can only provide these to the financial institution through a proper accounting system that has maintained the record of all these things.
The financial institution will then inspect in-depth to provide a loan to the organization.
To run a business smoothly you need to have a record of its transactions. Accenting plays a major role in keeping records. These records are gathered, organized, and then deduced to communicate to end-users.
Importance of Record Keeping:
Maintains Positive Client Relationships:
To find out the success of a business at any time, you need to keep accurate and detailed records of everyday transactions. Every customer’s account receivables have to be properly recorded. This ensures payments are collected and documented to the correct client’s accounts. This in turn guarantees you repeat business, maintaining positive client relationships.
Reduces the Risk of Dishonest Transactions:
A business is required to record expenditure transactions in a well-timed manner to certify that you only get paid for a certain invoice one time. It helps in reducing the potential risk of false and dishonest transactions.
Helps With The Tax Situation:
You should observe and keep up with your tax-deductible expenses when they happen to increase your ability to take benefit of the tax breaks available. It is a good decision to get a document scanner to sustain electronic copies of checks received and invoices paid for record maintenance.
As a manager, you will have to make different types of decisions. Accounting plays a major role in decision-making. For any business, the company needs a financial statement and it is made through a proper accounting system.
Without a proper record of accounting in business organizations, executive management can not make well-informed decisions, and therefore it is almost impossible for them to achieve business goals. This will harm the growth of any business.
A lot of stakeholders require financial information in the structure of financial statements. For instance, stakeholders that need financial information are creditors, investors, government, debtors, employees, and consumers.
If the business or the organization lacks financial records and accounts, the investors will not be interested in them. This is because they require financial information to know about business progress.
Reporting Business Surplus:
The main aim of any business is to make a profit. If you want to assess whether the business is making profits or not, you just need to maintain a good accounting system regardless of size. This allows the investment parties to come to a decision depending on the growth of the business.
Tracking Cash Flow:
A well-prepared accounting system assists in managing working capital requirements and other cash requirements within the company. Monitoring cash flow plays an important role in business growth in your business is struggling or progressively swelling.
If you keep a track of your money input and output like your bills, worker’s compensation, varied expenses, and much more, it will help you in identifying profit opportunities. A good accounting system will make you more aware of your business.
A strong accounting system guarantees the recording of liabilities in a timely fashion and those paid within the time period. This includes provident fund, pension fund, some or all taxes which includes the sale, VAT, and income. Timely payments of these liabilities help businesses in statutory complaints.
Preparation and Forecasting:
To grow a business, a company requires more funding to support the expansion. For example; you run the best assignment help service in your town and want to ensure that it remains the best in the future as well, then you have to look at the financial statement to determine which type of finance you need. When the year ends, your business needs to distribute its profit to the investors.
The chief finance officer of your business will then consider how the profit will be distributed amongst the investors, and how much debt is required to be paid off. Next up they need to figure out how much reserve in the form of money needs to be sustained for the company’s growth and future requirements.
You know very well that the stakeholders make their decision based on the financial statement and that an investor will not take the risk of funding a business with incomplete and complex financial statements.
Any information for instance tax, profit after tax, and profit before interest are what stakeholders and shareholders are looking for. This information should be transparent to them. This can only be achieved if every business transaction is recorded and maintained through accounting.
Now that you are aware of the importance accounting has in a business progression, make an informed design of your own for a brighter career.
“Best of luck”