Upload
vinay-kamal-srivastava
View
219
Download
0
Embed Size (px)
Citation preview
8/13/2019 importance of accounts
1/13
1
NEED andIMPORTANCE
OF
ACCOUNTING
Presented by:TARUN SHARMAVINAY KAMAL
SUDHANSHU SETHI
VIREN DUTTA
8/13/2019 importance of accounts
2/13
ACCOUNTING
THE LANGUAGE OF BUSINESS
2
Accounting is the information system that...
measures business activities,
processes data into reports, and
communicates results to decision makers.
8/13/2019 importance of accounts
3/13
- a process of identifying,
recording, summarizing,interpreting, analysing and
reporting the economic
information to decision makersin the form of financial
statements.3
Accounting
8/13/2019 importance of accounts
4/13
NEED OF ACCOUNTING
At the end of each year, all the businessmanwant to know how much they have gained or
lost during the year; how much capital is
invested at the end of year; how much amount
they are liable to pay and to whom they owe
it; how much is owe to them and buy whom
etc. In order to attain such informations , it is
essential to keep a complete and systematicrecord of each and every transaction entered
into during the year.
4
8/13/2019 importance of accounts
5/13
5
By keeping a complete and systematic record of every
business dealings, the businessman can know how much is
the amount of purchases , how much is the amount of sales,what are his total expenses and what is the amount of profit
earned or loss incurred during the year. Furthermore, he can
ascertain the financial position of his business such as how
much capital is at the end of year and how much is invested
in various assets. Besides the properly maintained accounts
are helpful in the assessment of income tax and sales tax and
are accepted as proof in court of law whenever needed.
8/13/2019 importance of accounts
6/13
WHY IS ACCOUNTING IMPORTANT?
6
From a laymans view, accountancy is keeping records of
transactions. Thus, most basic and simple motive of such an
activity is to keep a record for further use, This recorded data
helps the person to determine the earning and expenditures that
have taken place .In addition to that, such records are alsoproofs that such transaction has taken place . The last basic
intention is to determine fields that the income can be
increased and expenditure can be decreased.
8/13/2019 importance of accounts
7/13
IMPORTANCE OF ACCOUNTING
Importance of accounting has beenchanging with the changes in businessenvironment and increasing socialdemand over the centuries , The
importance of accounting remainedconfined to record keeping of financialtransactions only. But, today rapidly
changing business environment haschanged the importance of accountingand at present the accounting havefollowing importance in different spheres
:
8/13/2019 importance of accounts
8/138
Historical records
Information systems design
Service provider
Helps in determining net profit
8/13/2019 importance of accounts
9/139
Reputation and credit building
Prevention of fraud
Enables comparative study
Aid in decision making
8/13/2019 importance of accounts
10/13
10
Historical records: accounting is viewed as chronological
records of or financial transactions in books of accounts accordingto specified rules
Information system design: accounting is regarded asinformation system because it is capable of providing the kind of
information which managers, investors or creditors require for
taking appropriate decisions. In words of the movie Jerry Maguire,
is all about showing the money.
Service provider: Accounting is regarded as a service activitybecause it provides quantitative financial information that is helpful
to user in different ways.
Helps in determining net profit: it is also regarded as ameans of determining the true profit and loss of business enterprise.
8/13/2019 importance of accounts
11/13
11
Reputation and credit building: The reputation in business creditScores can be improved by simple act of establishing and operation a
sound in accounting information system in an organization. the belief is
that any company that has the got an efficient accounting system issuccessful in all aspects of business.
Prevention of fraud: Fraud can only be prevented in anenvironment when there is good internal control in place. Thus
accounting is only way of keeping track of all these an efficient andeffective manner.
Enables comparative study: By keeping a systematic recordaccounting Help the owners to compare one years costs, expenses,
sales and profit etc. with those of other years such a comparisonprovide the useful information. On the basis of which important
decision can be taken more judiciously.
8/13/2019 importance of accounts
12/13
ACCOUNTING AS AN AID TO
DECISION MAKING
Accounting helps in decision making by
showing where and when money has been
spent, by evaluating performance, and by
showing the implications of choosing one planinstead of another.
Fundamental relationships in the decision-
making process:
Event
Accountants
analysis and
recording
Financial
statementsUsers
8/13/2019 importance of accounts
13/13