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For this task am going to explain the purpose of accounting in a business organisation.

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Nassima Bouchelkia BND Business year1 ID NO, 317357 tutor, M Hamilton Unit 5, introduction to accounting P1) Introduction, For this task am going to explain the purpose of accounting in a business organisation. Accounting, Accounting is a process of identifying the business financial information, it also relates to keeping all financial records and transactions that relates to an organisation. It also known as measuring and interpreting the business economic information. Accounting used to indentify and represent the information to the internal users such as employees and management and external users such as the government and investors. The purpose of accounting, The purpose of accounting to an organisation is that it provides financial statements for the internal and external users which are used for different purposes such as making decisions. Accounting also used as guide to monitor the business income and expenditure. Additionally is also used to manage cash flow forecast that indicates to the business their current financial situation which will help that business to plan for the future Accounting comprises from two stages which are, Financial accounting, it relates to recording day t day transactions by using double entry bookkeeping. ...read more.


Additionally petty cash also is another method that is used to record day to day transactions that relates to low value items such as coffee, as well as trial balance is used to ensure and confirms that the information in the ledger account are correct because the numbers on the trial balance has to be the same as in the ledger account. Management accounting, it is the second stage of accounting, its purpose is to identify and interpret the information presented such as cash flow forecast and profit and lost account in order to make decision and control the costs for example if the cash flow forecast shows that the business is not making any profit as a result of high expenditure then the business might think of how to reduce it for example increase their sales. Management accounting also plane and create a different strategic in order to make improvements and ensure that they make an effective decisions. In addition management accounting also disclose the information found to the internal users such as, Employees the purpose of accounting for them is, they have to know the ...read more.


Loan providers are the people that provide the business with a loan. The purpose of accounting for them, is that will show them the business financial situation so they can decide whether that business is able to pay back the loan if they provide it for them or not. Debits and credits, debits are the people that the business owes them money, and the creditors are the people which the money is owed to. The purpose of accounting for them is, the creditors will decide whether to supply that business and for the debtors to decide whether to land money for that business. The government, the purpose of accounting is it will enable them to know how much tax they will have to deduct from that particular organisation also have to keep the businesses financial statement in their record because all the business are controlled by the government policies and they all have to be licensed. In addition the purpose of accounting for the government is also to assemble national economic statistic which are used in many and different ways in controlling the economy. ?? ?? ?? ?? 1 ...read more.

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