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Accounting is a life blood of running any business. Many people take this for granted believing that if you are starting a small business; you can do away with accounting. Such is not true. If one aims to improve his or her business and help it reach its full potential, basic accounting practices has to be followed. Accounting is the most essential part of any organizational or business either small or large. Accounting is very vast fields which consist of various methods such as process of bookkeeping that are involved in making the financial records of business transactions. These Bookkeeping methods are also used in preparation of statements concerning the assets, liabilities and operating results of a company. It is a very important process in an organization. The information derived from the accounting processes gives complete financial information about the company and conveys its financial standing to the owners and workers of the company. It also shows which products or assets of the company are most profitable and those which are weak. Day to day book keeping on the accounting principles helps in keeping record of daily transactions and also helps in preventing any frauds.
Accounting track the assets, liabilities, owner's equity, revenue and expenses of an organization. It provides not only current operating information for management but also track the historical transactions of the entity. It encompasses not only cash earned by the organization but also the investment activities, financing activities, lending activities, non-cash charges and recognition of and expiation of the useful life of assets used in the operating of the entity. It also encompasses intangible recording and recognition of items that may have a value yet are not specific in nature such as organizational cost, trademark, patent etc. I will reflect money owed accruals of interest on those money and also the amounts of excess over operating expenditures that have not been distributed. It is the basis of calculating taxes owed and due as well as a parameter as to the situation of the entity and is essential for owners and managers in calculating and projecting operational problems, budgets andcompensation. Without accounting no entity could survive.
Accounting plays an important role in decision making process in an organizational accounting system provides information in a form that can be used to make knowledgeable financial decisions. The information supplied by accounting in the form of quantitative data, primarily financial and relates to specific economic entities. Accounting provides the means for tracking activities and measuring results
Accounting is the art of recording, classifying and summarizing and it is an important part in any organization. The transaction that are occurring in day to day business is need to record, and it is the task of the accountant and the accountant provide the information, that help to know that whether the organization is in profit or loss and how to improve the business performance and it include the journal, ledger, trial balance and profit & losses account.
Accounting is a process of preparing accounts that provide financial and statistical information to managers that assists them to take day to day and short term decisions for the organization. Management accounting generates weekly and monthly reports for different departments of the firm statement tells that a manager should be aware of the accounting innovations proposed by management accountants which is very true because management accounting helps managers to take short term decisions.
According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its Resource (economics resources).
The main objectives of management accounting is to assist managers in decision making, maximize the use of resources, safeguard company's assets, helps preparing financial reports, planning and executing business activities.
Accounting is an important part of any organization but still has been neglected. Although, the fact is a most basic and important need of an organization in order to achieve its goal in an economic world. Accounting helps in identifying the seen as well as the unseen organization terrain. Accounting also contributes in overcoming the organization difficulties within or outside the organization. As we know that every business whether small or large has a structure of its own, accounting provides all sorts of support to the origination or the organizational management to keep the business in shape and run according to the structure of the organization.
Accounting helps the management to manage and control the organization and drive the organization towards in to profits.