It is essential to keep a record of every expenditure that we make. It helps us calculate our finances. Accounting, in simple terms, is the practice of keeping a record of all the expenses in and preparing a detailed report of all the expenses and financial statements of a business.
Accounting can be of many types ranging from Financial Accounting, Public Accounting, Government Accounting, Forensic Accounting, Management Accounting, Tax Accounting, Internal Auditing, etc. In places like Singapore, there are various bookkeeping services Singapore that manage their book lending systems through Management Accounting Systems.
Accounting is very vital in the case of the corporate world. It is very important for every business to have its own accounting unit to manage its finances. This article discusses the pivotal role of accounting in the corporate world.
Importance of Accounting
Accounting is all about record keeping. Only the proper analysis and of these records can help an entrepreneur analyze the financial position of his business. This can further help him to decide future plans for the growth of the company.
Generating Financial Statements:-
Accounting function helps generate three financial statements that give all the information about a business.
- Income Statement which gives information about the profits and losses of a business
- Balance Sheet reveals the position of the company in the financial market on each particular date
- Cash Flow, being a link between the income statement and the balance sheets, gives information about cash generation and expenditure in a particular period of time.
Accounting is very essential for budget planning and future estimations. It is almost impossible to plan a budget and estimate future growth without analyzing the past records of the company. Accounting provides an entrepreneur with those records.
Helps Gain Investors’ Trust:-
Any investor would like to check on the growth of the company he has invested in. He can call off any financial records. If an entrepreneur is not able to present the same, the trust of the investor is broken and he is likely to withdraw his investment. But with accounting, it very easily provides such records which help gain trust.
Accounting is very important when it comes to business. It upholds the integrity of a business. It helps lift up in many ways. Therefore it is necessary for every business to have an accountant and a separate accounts department if it wishes to survive in the market.