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ACCOUNTING: CURE FOR MANY BUSINESS RELATED PROBLEMS

ACCOUNTING

The term Accounting is been used very widely, every organization directly or indirectly depends on accounting and helps in communicating the required information to the users.

Accounting is an art of identifying, recording, classifying, measuring, summarizing, communicating and reporting the financial information.

 

IMPORTANCE OF ACCOUNTING

In general terms, accounting helps in many management processes which includes managing planning and controlling decisions.

It helps in making economic decisions by the stakeholders as it provides information which is quantitative and financial in nature.

It helps the business to run accurately as it gives the exact information regarding the financial position of a company which helps in managing the production.

It helps in managing the cash flow requirements along with statutory compliance.

It helps to create various budgets which help in future predictions for the businesses.

Provides information to various users of accounting information i.e. internal and external users.

It helps to know about the operations of a company, whether a company is in a profit or loss. It leads to comparison between years of income statements.

 

FUNCTIONS

The basic function of accounting is to record the information systematically. The recording is the first task which is done in the primary book known as journal book.

Further the data recorded is classified into different headings in ledger book.

 

Another function of accounting is to summarize the classified data which gives a proper understanding to internal as well as external users through the statements i.e. Trial Balance, Income Statement and Balance Sheet.

The final function is to analyze and interpret the recorded data which enables the end users to make judgement related to profitability and financial position of an organization.

After analyzing and interpreting, the communication is to be done in a proper form which is done through report making.

ACCOUNTING SOFTWARE

Accounting software refers to a computer based software which is used by accountants or professionals to record day to day operations of a business or a concern and manage and perform various accounting activities.

 

SOLUTION TO BUSINESS PROBLEMS

INCREASING ACCURACY

Accounting softwares helps in increasing accuracy through elimination of human errors. While when the operations are manually done lot of calculation error takes place which can create a great impact. Through accounting softwares the chances of error are minimum.

 

GREATER SPEED

Accounting softwares helps businesses to process accounts much faster than manually. It helps in increasing  efficiency through automation. Accounting softwares are capable of performing the calculations must faster than human  brain.

 

REDUCTION IN OVERALL COSTS

These softwares helps in reduction in overall costs as managing accounting systems becomes easier with lesser people and they can put all they can while performing the actions which helps in  reducing the administration and payroll costs.

 

PREPARATION OF BUSINESS REPORTS

Accounting softwares helps in preparing business reports which give all the information related to the financial activities, timely to the staff and other members of the organization. Whereas manually preparing reports is a time consuming process.

 

MAKING TAX PROCEDURE EASIER

It helps in making the tax process easier by keeping all the transaction related information at a proper place. These softwares help in calculating the returns automatically which saves lot of time.

 

CONCLUSION

Accounting is a crucial business activity as it helps to know about the financial position of a business and make other investment and divestment related decisions. Accounting becomes effective with accounting softwares and make decision making process more efficient.



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