Importance of Accounting

2.  “Accounting is the art of recording,
classifying and summarizing in a
significant manner and in terms of
money, transactions and events which
are, in part at least, of financial
character and interpreting the results
thereof.”

3.  According to American accounting
association, accounting has been
defined as, “The process of identifying,
measuring, and communicating
information to permit judgment and
decision by the users.”

4.  Financial Accounting is the very need of
a business to provide the information
which is useful for sound economic
decision making process and owing to
the diversification between ownership
and management.

5.  Being known as “The Language of
business”, accounting is the basic need
of a business organization to find out
where it stands and how it performs.

6.  Accounting coach defines Financial
accounting is a specialized branch
of accounting that keeps track of a
company's financial transactions. Using
standardized guidelines, the transactions
are recorded, summarized, and
presented in a financial report
or financial statement such as an
income statement or a balance sheet.

7.  It helps to ascertain the net results in
terms of profit or loss (Income Statement)
providing the information about financial
position of the business (Balance Sheet)
to the owners of a business relating to
what the entity owns in the form of assets
and what it owes in the form of liabilities
at a particular point of time.

8.  Accounting information is valuable tool
to the concerned managers to ensure
whether or not the business entity is
being directed in a way as wanted,
While it’s a means to provide the
information to the investors to find out the
future prospects of business. It is also
useful for the employees and customers
in order to know the condition of the
business entity.

9.  Accounting is of a great assistance to
management for planning, controlling
and decision making process. It is with
the help of accounting information that
the performance of an entity can be
appraised, at the same , its methodical
records make possible to eliminate the
frauds and the thefts.

10.  Accounting is a must for every business.
Exclusive of accounting leads to create
chaos and discrepancies in business
transactions.

11.  Companies rely on the financial reports
being prepared by their accountants to
be true and accurate that in turn can
lead a business management to make
sound business decisions.

12.  For further reading, please refer to the
following article.