BUILD ON AMBITION - DELEVERING ON BELIEF
Overview
Accounting is the processor keeping the accounting books of the financial transactions of the company. The accountants summarize the transactions in the form of journal entries. These entries are used in bookkeeping. The books of accounts are prepared by the accountants as per the regulation of the auditors and various regulating bodies. The accountants might follow the Generally Accepted Accounting Principles (GAAP) or the IFRS (International Financial Reporting Standards) principles.
Benefits of Accounting in a Business
Planning
Accounting information is helpful in preparing business plans. The basis of post records and comparative study of financial statements future events may be estimated.
Decision Making
Accounting helps the management in decision making by providing the relevant information. Determining selling price, allowing discount and credit facility to regular customers, etc. are few of the important decisions.
Controlling
To make effective controlling actual performance is compared with the desired or planned targets. The actual data is supplied by accounting books, without that the controlling may not be possible.
Assessing the performance and financial position of the business
An statement of P & L discloses profit earned (or loss incurred) during a particular accounting period. Profit is a measurement of the performance of the business. A balance sheet states the financial position of the business on a particular data. Thus, accounting helps in assessing the performance and financial positions of the business.
Compliance of Law
Every business has to deal with various government departments like income tax, sales tax, custom and excise etc. Various periodic returns are to be filed with these departments. Accounting helps in preparation and filing of such returns.