Accounting plays a major part in any business enterprise. Here, we will know what are the key benefits of business accounting.
Accounting helps in business maintenance, financial statement preparation, decision making, result comparison and many more. It enhances the growth of a business organization. The benefits of accounting are vast. In this article, we are going to discuss what are the key advantages of financial accounting.
Systematic and Complete Record:
Accounting is generally done scientifically. It is a systematic and complete recording of all kinds of business transactions. With accounting, it becomes possible for people to keep every transaction in their minds. Every business transaction is analyzed and recorded by accounting properly.
Selling Price Determination:
Decision making is one of the major functions of a business management system. Accounting always helps and assists the business management to take proper decisions in respect of selling price determination, cost deduction, sales increment and many more.
Enhance the Value of the Business:
In the case of a business sale or business conversion, the fair and true value of a business is generally calculated. Through accounting, the prominent balance sheet can be prepared and the purchase price can also be determined. Balance Sheet shows the real value of assets and liabilities of any business which is used for calculating its net worth.
Helps in Loan:
If you want to expand your business further then more fund is required. Due to a lack of money, a business may never be expanded. In that case, funds can generally be increased by taking a loan from financial banks. These banks usually lend money based on the profitability and quality of the business organization. Soundness and profitability are generally measured by accounting.
Evidence in Court:
Every transaction of a business is generally recorded in an accounting book supported by authenticated documents. The accounts are used as premium evidence of the law in a court.
Helps in Tax Laws
Every business deals with different governmental departments such as sales tax, income tax, excise, and custom, etc. Several periodic returns are to be filed and prepared with governmental departments. Accounting always helps in filing and preparation of these returns.
Accounting properly facilitates feedback to business management. It can always help them in planning and generally control of various activities of the business organization. Moreover, accounting helps the business management for evaluating the overall performance of the organization and takes necessary action to reduce the shortcomings in the business management system.
Thus, you have already learned what are the different advantages of accounting. If the accounts are properly maintained then net profit, sales, gross profit of a business can be measured. In Hobart, many companies offer business advising and accounting services at a low cost. You can take their services to your business organization.