Financial accounting

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A detailed explanation of the purpose of keeping accurate records

The purpose of keeping accurate records will provide information that will help managers to make decisions about the future trends of their business. Keeping good record is vital in regards to meeting the financial commitments of a business and providing information on which decisions for the future of the business can be based. While the business maintains records to monitor and record its normal business activities it is also necessary because of obligations under the taxation laws. Stakeholders should be kept informed in order to improve investor's confidence and can make more contributions by investing more money into the business if they are regularly informed about the success of the business. Paying high dividends to shareholders and informing them on future dividends can make shareholders invest more money. A business that does not have accurate financial records may run into serious problems such as:

1. Making a mistake that leads businesses to lose the customers' confident.

2. Overcharging customers will lead to businesses losing its customers.

3. Overstating sales figures also overstates profit and pays too much tax.

4. Overstating sales figures and profits gives