Question by P_P: Why are accounting and bookkeeping needed in an organization?
Why are accounting and bookkeeping needed in an organization?
Best answer:
Answer by Bridget
So nobody walks off with your hard earned money!
Give your answer to this question below!
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Tags: accounting, bookkeeping, needed, organization
I can say that primary role of accounting is to capture, analyze, record and report data on the transactions which had an impact on the financial position of the organization during certain period of time.
From this concept we can see that the result of the accounting process is provision of certain information in the certain form to the persons or entities, who use this information to make decisions related to the organization.
There might be very wide range of persons and entities, using information provided by the process of accounting.
For example, business owners are interested in the profit the business earns and value of the shares in the business. Accounting gives them this information
Suppliers which supply goods to the business are interested whether the company will be able to pay for the goods they have supplied to it. Accounting gives this information to the suppliers.
Banks and other creditors are interested whether the organization will be able to repay loans and pay interest. Accounting again provides information on the ability of the organization to pay its debts on time.
And so on, other users of accounting data can be customers, employees, tax authorities and other.
Accounting plays vital role in any organization while recording and reporting financial data on the activities of the organization. Without accounting we as the parties interested in the results and success of operations the organization is involved in would not be able to know whether such operations are successful and profitable.
More on accounting on my website http://www.bookkeeping-financial-accounting
-resources.com
So that we have feedback on how well(or bad) we are performing from a financial point of view. Think of financial reports as showing the health of the organization.
Every organization has resources they obtain and use in pursuing their goals.Accounting and bookkeeping tell us where these resources came from and where they went.