Often, when we start any work or to learn, we think, what is the need to do the work or learning specific skill. Whether you are learning computer or any practical thing, you will also ask same question. Same thing apply on accounting.
Accounting is essential need of business. Business can not survive without accounting. Accounting provides the information of performance of business. If you have invested your capital in beginning of year, what is the value of capital at the end of year. Difference is the performance of your capital. You can decrease your capital or you can increase your capital. Accounting will provide the information of net profit or net loss. So, when we will receive this information, we can change our so many past decisions. For example, if our capital has decrease by 40% due to loss in business. We can search the reason through accounting information. For example, product C and D are performing bad. So, we will stop to invest our money in such bad performing products. By doing this, our cost will decrease, and by stabilizing our other products growth, we can gain in next year.
Accounting provides not only net profit or net loss information but it provides the information of financial position. That is the reason, it is very needful skill which every businessman should learn. When we see the balance sheet which is main part of financial statements of accounting, we can know our liabilities and assets. If we invest our capital in bad assets, our financial position will down fastly. Good businessmen see this position and start to solve the position by dispose off bad performing assets. All those who do not keep accounting records will never get out from this trap because when they suffer losses, they start to get loan at high rate of interest. So, losses will increase and interest and loan will increase. One day, whole business will destruct due to this. So, all intelligent people keep accounting.
Now a day, accounting is useful for calculating best selling prices, best future cost of product or production and tax administration.
Moreover, accounting will be needful for maintaining the records of all your employees through payroll accounting management real time system.
If I talk about my personal aspect. In my family, I am so lazy to keep accounting record of my personal money. But my father is so careful to record each day's personal expenses transactions. Sometime, I suffer, lack of money because over expenses than what I think. But my father's budget is so strict. If you will make accounting as the part of your personal life, you will never face the lack of money because your daily expenses record will guide to you to do more expense or not.
Accounting provides not only net profit or net loss information but it provides the information of financial position. That is the reason, it is very needful skill which every businessman should learn. When we see the balance sheet which is main part of financial statements of accounting, we can know our liabilities and assets. If we invest our capital in bad assets, our financial position will down fastly. Good businessmen see this position and start to solve the position by dispose off bad performing assets. All those who do not keep accounting records will never get out from this trap because when they suffer losses, they start to get loan at high rate of interest. So, losses will increase and interest and loan will increase. One day, whole business will destruct due to this. So, all intelligent people keep accounting.
Now a day, accounting is useful for calculating best selling prices, best future cost of product or production and tax administration.
Moreover, accounting will be needful for maintaining the records of all your employees through payroll accounting management real time system.
If I talk about my personal aspect. In my family, I am so lazy to keep accounting record of my personal money. But my father is so careful to record each day's personal expenses transactions. Sometime, I suffer, lack of money because over expenses than what I think. But my father's budget is so strict. If you will make accounting as the part of your personal life, you will never face the lack of money because your daily expenses record will guide to you to do more expense or not.
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