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

Authors Avatar by georgette94 (student)

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.

Without records it would be very hard and time consuming for the business to know how much money they owe to other businesses, how much debtors owe to them, whether they are making a profit or a loss and if they are paying the right amount of tax.

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Good record keeping in your business is essential for its success, it shows how well the business is doing, whether targets are being met and whether the business is over spending anywhere.

It is important that records are kept up to date regularly, ideally on a daily basis. This helps to maintain control over what is going on and efficiently monitor activity, as the accounts are being looked at constantly.

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 ...

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