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Accounts help businesses stay organised, on track to success and prevent cash flow problems

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Introduction

´╗┐Subject: Business Accounting Accounting is the recording of a business? financial transactions going in and out of the business. Within any business it is necessary to have an accounting system so that you can keep your finances in order, this is important as you will need to know what is coming in and out of your business to find out whether your business is making a profit, loss or breaking even. Accounting can help a business in many ways; it could point out information that is key to the businesses success such as the best and worst selling product, where the majority of the business is spending its money. It is a legal requirement for you to keep records of any transactions going in or out of the business, no matter how small they are, for at least five years. ...read more.

Middle

Many people use accounts for different reasons, some of them are: Managers, who use them to make informed decisions, make sure the business is making enough money to pay for wages, bills, stock and other demands. They need to make sure there is money saved for a rainy day. Employees can use accounts to see how well the business is doing in regards to the security of their employment. Owners and investors will use it to compare to different companies and think about whether they could put away excess money that isn?t being used. Suppliers can look at whether the business has enough money to pay for the materials they want to buy and whether it?s a good idea to have a contract with them. ...read more.

Conclusion

Financial accounting provides historic information about the business performance over a specific time period. This is for external users, including potential investors, shareholders, bank, suppliers and the government. This includes the preparation of financial reports that include a balance sheet, which shows the businesses assets and their liabilities at a specific point in time and income statement, which show the profits or losses, expenses over a certain period of time Management accounting focuses on information that is used internally; it is used by managers to improve decisions for the future of a business. This type of accounting will require monthly or weekly reports, these help make better informed decisions. Conclusion Accounts help businesses stay organised, on track to success and prevent cash flow problems as long as they are regularly monitored and managed properly. ...read more.

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