Accounting is the registration and reporting practice for business transactions. The results of your business activity must be maintained in an organized and consistent manner. Although companies vary greatly, accounting standards that are essential to the operation of a corporation remain the same.
Probably you didn't go into business to do paperwork, make spreadsheets or do your accounts. This is one of the least exciting aspects of operating a company for many people, but it is one of the most critical parts. You need to get the basics of accounting right if your business is to succeed and the financial state of the business can be quickly and easily assessed and understood.
The justification for keeping the company's accounting records is to educate various stakeholders about its financial results. However, accounting information needs to be accurate and comparable in order to assist stakeholders in making these decisions.
This is only possible if the reports of the financial statements are based on clear accounting practices and principles.
Therefore, widely agreed rules and standards have developed to offer the accounting concepts uniformity and continuity.
Accounting is a necessary part of any business success
Accounting provides a means for business executives to assess the financial status of the business. With this financial information, management can compare the company's financial position with previous financial years, fix realistic goals for fiscal years or years in the future, and take decisions that depend on the company's finances or that influence them. Business holders, staff and the general public are also informed about the financial status of the business through accounting reports. Actually, all companies are required by law to report to the IRS and/or other governments and financial entities for some type of accounting. Internal or external auditing is an important business feature. It will ensure a successful audit by having sound and effective accounting practices.