Importance of Accounting

Importance of Accounting :

1. Keeping systematic records of financial transactions: Accounting is the process of systematically recording all the financial transactions of a business. It helps in recording the financial transactions of a business in a planned and orderly manner.

2. Helps in decision making: Accounting provides information on financial transactions (income, expenses, assets, liabilities, cash flow, etc.), which guides investors in making decisions.

3. Measuring the performance of a business: Accounting helps in evaluating the business by showing the profitability, financial position and efficiency of the business. The performance of a business can be measured on the basis of financial statements. This can be used to find out the profit or loss and the overall financial position.

4. Legal compliance: Every business must keep records within the scope of government regulations and laws. Accounting helps in preparing accurate and systematic records and information to meet all legal requirements.

5. To increase funds: Accounting provides reliable financial statements, which helps in increasing funds in the business.

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