Introdution: Importance of Accounting in Parts of Business Are Described Below

INTRODUTION
An accounting system is an orderly, efficient scheme for providing accurate financial information and
controls. Good financial recordkeeping enables business organizations to plan properly and also
check for misappropriations of resources. Financial record keeping has become the foundation on
which modern businesses thrive for growth and sustainability. An accounting system records, retains
and reproduces financial information relating to financial transaction flows and financial
position. Financial transaction flows encompass primarily inflows on account of incomes and
outflows on account of expenses. Elements of financial position, including property, money
received, or money spent, are assigned to one of the primary groups, that is, assets, liabilities,
and equity. Within these primary groups each distinctive asset, liability, income and expense
is represented by respective “account”. An account is simply a record of financial inflows and
outflows in relation to the respective asset, liability, income or expense. Financial reports such as
the balance sheet, income statement and statement of cash flows are critical for ownership and
executive leadership. The balance sheet illustrates assets, liabilities and capital structure, while the
income statement details revenue, expenses and net income. The cash flow statement delineates
operational, investing and financing cash inflows and outflows. All of this information comes from
the general ledger system, which is updated by the bookkeeping process.
BODY
Businesses are highly dependent on financial records kept in the books of accounts indicating
different transactions such as sales, purchases, income, and payments by an individual or
organizations. Good financial records, can greatly improve many of the management decisions a
business owner and or manager takes, including decisions about marketing, personnel, borrowing,
pricing, inventory, and product development. It also allows business owners to make strategic
decisions in a confident manner, and they also help keep a business alive. If there isn’t enough
money to make payroll or meet the obligations the business faces, business owners must know and
take the appropriate steps to correct the situation. Without accurate reporting, a business can
become off course and management won’t know until it's too late. This is especially true when it
comes to capital structure and cash flow. Too much debt and high payments can spell disaster for
business. Bookkeepers are essential for tracking issues.
Importance of Accounting in parts of Business are

described below;
Importance of Accounting in Planning

Proper planning is very much needed for the successful completion of various management
activities.
This planning’s cash planning, sales planning, procurement planning, determining the quantity of
stock, development planning, fixing up target-profit, etc. are very much dependent on accounting
data and information.
Accounting Importance in Organization
Accounting plays a very vital role in the proper execution of the important functions of the
management organization.
Accounting helps management-organization by providing information like percentage of profit

over the capital, capital investment position, management efficiency in controlling, etc.
Accounting Importance for Motivation

Labor-employees are to be motivated for achieving expected performance. Financial reward is one
of the main motivating factors of work.
The management is to be aware of the financial position of the business for providing financial
benefits. Accounting helps management by providing necessary information for taking proper
decisions.
Accounting Importance for Co-ordination

One of the main functions of management is to achieve the final target of the business by
coordinating various activities of different departments. Accounting helps in coordinating various
activities of different departments of the business.
It also helps the management in the adjustment of purchase with sales, an expenditure with
income, sales with debt receivable realization, etc. to a great extent.
Accounting Importance in Control

The main functions of modem management are planning and controlling. Controlling is essential
for completion of activities according to plan. Accounting can help management much in control.
Accounting Importance Media of Communication

Accounting plays a vital role as a media in communicating various information from different
departments, business, and management plan of actions to various departments.
For instance, in the modem age; Accounting is regarded as the best media of communication in
supplying information to management regarding purchase and stock, time of purchase, cost of
purchase and sales price, etc.
Besides, the function of Accounting is to collect and provide information about the business to
various interested parties.
Accounting Importance in Budgeting

Preparation of various budgets is essential to run the business successfully. The historical
information which is needed in the preparation of the budget is supplied by Accounting.
Accounting Importance in Professional Advice

An efficient and honest accountant helps the management with valuable professional advice for
the development of its business. In the modem age with the complexities of business
management has also become complex.
In this aspect, the role of accounting is very important. The efficiency of management depends on
the efficient use of accounting data and information. In the developed countries accountants are
regarded as efficient and successful managers.
In the modem age, in big organizations accountants are included in the management committee. It
can be said that Accounting and Management are interdependent. Accounting is an essential tool
for management.
SUMMARY AND CONCLUSION

Accounting records are very essential for decision making and majority of the respondents do not
prepare yearly financial statements. It also revealed that majority of the small scale business
operators measure performance of their businesses. Profitability is widely used as a measure of
financial performance; workers provide a strongest linkage to successful business performance.
Majority of the small scale business operators do not set yearly objectives for each
performance indicator and majority do not prepare budgets for performance appraisal. Findings
showed that there is a strong positive relationship between accounting record keeping and
performance of small scale enterprises. This implies that accounting record keeping affects
performance of small scale business. Accounting record keeping is essential for decision making.
Business adjustment and records also help to improve business efficiency and productivity for
effective business performance. It was also found that . In conclusion, poor accounting records
keeping would lead to poor financial performance and proper accounting records keeping would
lead to better financial performance of the small scale enterprises. Research by Chelimo and Sophia
(2014) revealed that about 60% of small businesses fail within the first three years due to
management inefficiencies brought about by poor record keeping.

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INTRODUTION

Importance of Accounting in parts of Business are

Importance of Accounting in Planning

Accounting helps management-organization by providing information like percentage of profit

Accounting Importance for Motivation

Accounting Importance for Co-ordination

Accounting Importance in Control

Accounting Importance Media of Communication

Accounting Importance in Budgeting

Accounting Importance in Professional Advice

SUMMARY AND CONCLUSION

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