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Purpose of Accounting

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Introduction

The Purpose of Accounting The core aim of a business is to survive and to make a profit in its life time. And give the Manufacture or service the reputation to live its business life. Business use different ways to use accounting to record transactions, Monitor and control accounting records and take appropriate actions, make management decisions to plan for the future and monitor and control those plans and finally measure financial performance (gross and net profits, and value owed to and by the business. Recording Transactions Businesses record transaction to sell what the business has spent by this I mean if an employee was asked to go and get more pens and paper from the local store as the next delivery time is in a few days and they are low on pens and paper now. So the employee would go down to the nearest store and buy the items that have been asked to be bought by the head of department. The employee would have to buy this out of their own money but the company will pay the employee back from what they have bought, the company would also want the receipt of the item purchased so that they can keep track of what they are spending on and where the money is going. ...read more.

Middle

When it comes to accounting you will need to have some one that is qualified in that part of accounting as a slight miss calculation could cost the company money from some ones miss calculation. So the business will have to splash out on some one that is either in the business that understands accounting or has a qualification in that given area of business. Monitoring and control accounting records are important as they will show the business where their money is going and whether they are making any miss judgements in putting their money into areas which are not making profit for the company. A company then can see that their marketing area of the business has a low amount of progress that needs to change. So what the owners may decide to do is take appropriate actions towards this marketing team and invest in their area to boost the out come from that given area. Also the business uses these kinds of ways of keeping track of sales in store and expenditures: A Sales Invoice A Statement A Purchase Order A Purchase Invoice Make Management Decisions to plan for the future and monitor and control those plans Businesses naturally evolve from both making money and reputation or even word of mouth through this a business can either expand their business empire or they could even franchise the company. ...read more.

Conclusion

Net profit Net profit is the amount of profit that is left over after employee's wages and necessary expenses have been deducted. Businesses have ways in which they count out the money to find out their profit. There are processes they can use to calculate all of the money that has been made. By using a computer that will add up all of the money that they have made and then deduct all of the expenses including wages, gas and electrics. This will then give the business a view on what they have made. There is also a way in which the business can save money and count out the money them selves. This will take longer but the money saved from the usage of this will be greater. But with a person counting the money will have a greater responsibility as if there is a slight miss calculation then it could cause problems for the business and they could spend money they don't have. This may have a problem on the company as they may decide to buy new computer upgrade for the system, but they can't do it as they can't afford these upgrades and so the business will have to find more money. 6 ...read more.

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