Importance And Purpose Of Accounting And Bookkeeping

Importance And Purpose Of Accounting And Bookkeeping
Accounting

Accounting is the systematic process of recording, identifying, measuring and communicating economic information to permit informed judgment and decisions by the users of the information. (American Accounting Association)


ALSO READ: Difference Between Book Keeping and Accounting


Bookkeeping is usually performed by a bookkeeper. Bookkeeper is one of the most significant human assets of a company as it’s the bookkeeper’s responsibility to handle and keep on track the company’s entire financial records, ensuring all the details of their business’ day-to-day financial transactions, the money flowing in and out a business, are recorded in the correct day books: supplier’s ledger, customer ledger and general ledger and bringing these recorded financial transactions to the trial balance stage so that the accountant can used them in preparing the company’s income statement and balance sheet.

There are so many importance of accounting which I am going to highlight on this post.

1. Accounting information can be used for decision making.

2. It provides permanent records for all transactions.

3. It helps to determine the profitability of a business concern.

ALSO READ: Users Of Accounting Information


4. Accounting records are used for tax assessment.

5. It helps to prevent fraudulent practices.

6. The records provide a means by which the finances of a business are controlled.

7. Accounting records shows the income and expenditures of a business over a given period of time.

8. The assets and liabilities are shown by the accounting records.

9. Keep a Clear Picture of your Company’s Financial Health.

10. Book keeping and Accounting makes business planning easy and attain.

11. It makes reporting to investors easy.

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