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The Role of Accounting in Business

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  • Level: High school
  • Pages: 6 / Words 1539
  • Paper Type: Essay
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Question :

 This assessment will cover following questions:

  • How accounting department is contributing to the success of an organisation?
  • Explain the importance of data produced by the accounting section for the stakeholders?
  • Identify the role of accounting in the process of effective decision making?

 

Answer :

Clatworthy, García, Lara & Lee, (2020) established the fact that Accounting is referred to one of the most crucial processes which is useful in recording the various set of financial information pertaining to the organization. The accounting process is considered to be very useful in analysing, summarizing and reporting to the company's stakeholders to make strategic decisions. Accounting is considered to be the system of documenting the various financial activities which in turn are considered to be necessary for the growth of the business. The key purpose of the accounting is to provide various stakeholders of the business such as investors, suppliers, management, owners, board of directors, creditors, etc. This in turn helps in measuring and summarizing various activities of the business and also communicate the same to the interested parties in order to make strategic decision which is beneficial for the growth and performance of the business. Accounting is considered to be very crucial for evaluating the assets, equities and liabilities of the company. Massingham, (2017) argued that, one of the primary role of the accounting in business is to record all the financial transactions in a systematic and appropriate manner. Accounting is considered to be very useful in controlling the cost of the business which in turn eventually leads to higher operational growth, sustainability and attainment of economies of scale. The key role of accounting is that, it helps in evaluating the performance of the employees which in turn results in higher operational growth and productivity. The main role of the accounting is that, it is considered to be very useful in determining the key cause of errors which in turn largely influence its business operations. Managers in the organization tends to need accurate and timely information associated with the financial data. This in turn is considered to be very useful in assessing and interpreting the results of the financial reports. This in considered to be very useful in solving several financial problems by identifying the fraudulent activities and errors while carrying out accounting. Mintz, (2016) said that, the key role of accounting is that, it is considered to be very useful in complying with the rules and regulations of the government. It helps management of the organization to determine any mistake which has been made while reporting income. This in turn might results in huge penalties, fines and charges. The key role of accounting is that, it helps in planning goals and objectives for the future.

The management of the company tends to analyze the future budgets by taking into consideration the past historical data. Accounting is very beneficial for the business because it helps in controlling the cost associated with hiring which in turn eventually results in rapid expansion of the business. Accounting in the business results in ensuring statutory compliance which tends to ensure that, liabilities associated with VAT, sales tax, pension fund, income tax, etc. are properly addressed. One of the most accurate role of the accounting is that, it helps in setting a clear picture in order to attain the financial position of the business. It is very useful for the management to reduce the fraud and errors which in turn has been carried out due to several fraudulent activities within the organization. The key role of accounting is that, it tends to provide various necessary information which in turn is useful in finding appropriate solution to the set problems. Accounting in turn also leads to analysis and prediction of the financial ratios which in turn helps in gauging the performance and operations of the various financial ratios of the company. External environment is considered to be one of the key reason for balancing and maintaining attractive relationship for both the investors and the company. Lai & Samkin, (2017) sought to analyse the fact that, accounting plays one of the critical role in filing the various financial statements of the company with the registrars. Accounting is considered to be very useful in future projections and creating the budget plan which in turn leads to higher sustainable decision. The key role of accounting is that, it is considered to be very useful in analysing the business trends which is considered to be very useful for financial decision making. Analysing the trends of the business helps company in performing better in the business. This eventually leads to future growth and sustainability. Accounting data is considered to be very useful in making several crucial de scion which is considered to be useful in determining and evaluating the reliability and viability of the data. It also management of the business in making careful analysis of the projections which in turn eventually leads to in determining the hurdles associated with the return on investment. Th key role of accounting for the business is that, it helps the management of the organization to develop an appropriate plan which is useful in meeting the targets. This in turn eventually leads to long term operational efficiency, performance and productivity. Accounting is considered to be very beneficial in setting the optimum inventory levels by effectively determining the break even analysis.

Hassan, Haque & Ul, (2017) investigated that, the key role of accounting is to develop an appropriate pricing strategy for the business which in turn helps in controlling the cost and expenses associated with the business. Accurate accounting and financial information is considered to be very beneficial for the business because it helps in developing projected product mix and sales plan which in turn leads to long-term sustainable growth and efficiency. This in turn helps businesses in reaching the overall gross level of the profit by covering the overhead costs. It also helps in producing the relevant target for the profit which in turn affects the business operations. Accurate and timely accounting and financial information help stakeholders of the business to take various investment decisions which are in favor for the growth and reliability of the company. A good structure accounting system is considered to be very useful in providing relevant information which are considered to be necessary and crucial for the better operational efficiency of the business. Stafford & et.al. (2018) established that there are various set of accounting reports which mainly includes income statement, balance sheet statement, shareholder's equity statement and cash flow statement. These accounting reports are tailored in accordance to the needs of the individual manager which tends to provide timely, accurate and relevant information. This in turn aids at making several business decisions that are very crucial for the development and growth of the company. Accounting tends to play a key role that helps mangers in carrying out the responsibilities of the business. This in turn leads to higher growth and operational standards. The key role of accounting is that it helps businesses in carrying some financing, operating and investing activities which in turn is very beneficial for attaining goals and objectives of the business. Accounting is useful for businesses to determine the change in the financial condition of the business. Accounting is referred to as the backbone of the financial records of the company. This in turn helps in facilitating comparison and also helps in eliminating ambiguity which in turn is considered to very crucial for reducing any business risk which in turn might hamper the business performance.

Also Read - Techniques of Management Accounting

Birt & et.al. (2019) established the fact that, the key role of accounting is that, it helps the management of the business in tracking its business activities. It is considered to be very useful for the management of the organization in maintaining the budget, forecasting revenue and predicting the cash flow of the business. It helps top management of the organization to make effective informed decision associated with the purchase, sales and investment for the particular period. The key role of the accounting is that, it helps business in controlling the accounts and financial transactions of the business. This in turn results in higher operational growth, performance and productivity. Accounting is considered to be very useful in assessing the financial health and profitability of the business. Accounting is considered to be one of the vital concern of the contemporary business environment. This in turn is very useful in assessing the cash flows, income, expenditure, assets and liabilities of the company. The key role of accounting is to keep proper track of the transactions of the business. It is considered to be very useful in assessing and discovering corporate abuse and various other activities like dishonestly, theft, greed, etc. Accounting is very beneficial in assessing the present financial status of the business at a particular point of time. It is useful in detailing business operations and transactions. Accounting is considered to be one of the appropriate approaches which helps in analyzing accounting and also summarizing the activities of the business. This in turn leads to long term operational performance, productivity and profitability of the business.

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