Accounting is known as the language of business. Business accounting plays a vital role in the growth of the business. Accounting includes everything from simple accounting to comprehensive company accounts. Accounting in every aspect of the business is useful for the strategic growth of the company. The different accounting practices lead to the understanding of what is happening in the company and to provide ideas. That help to make decisions about what to do in the future. A record of expenses and income facilitates the improvement of the strategy to minimize expenses and achieve a greater amount of income.
The cash flow statement also says if you can manage finances. And help you avoid late payments due to the shortage of money. The budget is essential to manage a business. Or a company and the creation of a budget is one of the main characteristics of accounting. The budget that is made with the help of accounting tells you to spend what you have.
Another characteristic of accounting is to analyze the cost of the product.
Define the costs of the product, how much should be the cost of making and selling the product. Describe in detail the expenses and income, to calculate the benefit and have an idea on how to maximize the benefits. Analyzing the cost helps precisely to make the specific changes related to marketing, insurance, and other expenses so that the benefit can be maximized. It also informs you about the sale of the product that is missing in the marketing of the product and the costs are unnecessary. The finance department that deals with accounting divide sales with respect to profit margins to help understand the generation of income. Determine where the benefit is not generated much. And where you can generate more profits.
The accounts department sees a steady and growing sale to determine the best idea of increasing revenues and maintaining control at the expense (Choudhury, 2006).
The accountants also maintain the record of the company’s debt, to avoid the growing interest in the debts.
The company’s financial statements indicate that the amount of money we have in hand and. Later, the repayment of debts becomes easier. If the debts are paid the financial status of the company without knowing it. Can result in the loss of the company. Therefore, it is essential to have an adequate account of the financial statement. Accounting can only do this, and finance also controls credit reports to take advantage of the best loans with the lowest interest rate.
The finance department also defines the terms of credit.
That kind of terms you can offer your accounts receivable to avoid overdue customers. It also helps determine if one of the customers who is paying slowly should be eliminated. Because the profit they generate is less than the cost they had to pay due to the delay. Each company must perform the audit at the end of the year. All records, finances, cash flow, sales records, and economic activities, help in the audit of the company so that tax payments can be made. And the audit is done to pay taxes on the income of the company. The company’s finance department is responsible for providing all the necessary reports required by the auditing company. Auditors should verify the maintenance of all types of records. And then provide a clear report that is very important to any company.
The business depends on accounting in many aspects.
Accounting helps make raw numbers understandable with respect to productivity and performance. All accounting is done in accordance with universally defined principles that are accepted accounting principles. The accounts also help the different departments of the company, such as management, stakeholders, suppliers, economic activities, customers as well
BY: Letty Karina Elizalde Marín *