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Without accounting, organizations would have no basis or foundation upon which daily and long-term decisions could be made. Common financial transactions and tasks that are involved in bookkeeping include: Billing for goods sold or services provided to clients.
Recording receipts from customers. Verifying and recording invoices from suppliers.
Monitoring individual accounts receivable. Recording depreciation and other adjusting entries. Objectives of accounting Permanent Record Any business firm needs a permanent record of the transactions that it indulges in.
These records could be vital for internal purpose, for taxation purpose or for any other purpose. Whenever the organization commits any resource of monetary value either within the firm or outside the firm, a record is made.
This permanent record is held on for years and can be retrieved as and when need be.
Measurement of Outcome A business firm may indulge in numerous transactions every day. It may make profit in some of these transactions while it may make losses in some other transactions. However, the effect of all these transactions needs to be aggregated over a period of time.
There must be daily, weekly and monthly reports which provides information to the organization about how well it is performing its activities.
Accounting serves this purpose by providing periodic financial statements which help the firm adjust their operations accordingly. Creditworthiness Firms need resources for their functioning. They do not have any capital stock at hand and need to obtain them from investors.
Investors will give money to the firm only if they have reasonable assurance that the firm will be able to generate enough profit. Past accounting records help a great deal in proving this.
All kinds of investors from banks to shareholders ask for past accounting details before they trust the management with their money.
Efficient Use of Resources Firms can also conduct useful internal analysis with the help of accounting data. Accounting records tell the firm what resources were committed to what activity and what time. These records also summarize the return that was obtained from these activities.
Management can then analyze how they could have performed better and used resources more efficiently. Projections Accounting helps management and investors look forward. Costs and revenue growths can be projected after substantial data has been accumulated.Best Assignment provides homework and assignment help for school, college and PHD level students for different streams like marketing, finance, accounts etc.
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