Need And Importance of Accounting

Accounting is the language of Business because every business field need books of accounts to calculate Net Profit / Net Income (Revenues - Expenses) in order to find out Financial Performance of the business’management (Income Statement Does This Job). Also every businessmen want to know the financial position of its business’s Assets, Liabilities And Equity (Balance Sheet Is What You Are Looking For), otherwise, successful business can not be established without knowing these important accounting findings.

Either a Small Business or Sole Owner is maintaining Improper Books of Accounts (Single Entry System) or a Larger Business Organization which adopts Proper Books of Accounts (Double Entry System), accounting plays an important role in maintaining of books of accounts in order to keep an eye on Expenses and Incomes, Assets, Liabilities and Equity of the business.

If a business adopts Double Entry System of Accounting, then it can easily calculate Net Profit or Net Loss for the accounting period.

Accounting provides true, fair accurate, reliable information because proper books of accounts are maintained under Double Entry Bookkeeping System and hence errors, mistakes and frauds are prevented, detected, identified and corrected with the use of proper audit and verification of accounts either by applying internal audit which is conducted by the management of the business or external audit which is conducted by a qualified chartered accountant firm.