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Saturday, September 23, 2023

Role of Accounting In Society And Business

Accounting do more than we can think of. Survival of any society, growth of business and life cycle of banking depend on accounts. Role of accounting is addressable in every phase of our lives. Because need of jobs, fulfilment of basic requirements of life, regularity of education, communication between human beings, sharing of resources, and dealing with clients; money is involved in all matters. Hence, division of accounts in a proper a way is required and mandatory and it has different bad effects on life cycle if well-defined rules are not implemented well.

Every society is a combination of different components that make it grow well. Those components have different effects on its growth. Major components of society include satisfaction of basic needs of people, implementation of law and order, power management, division of work, communication management, transmission of cultures, flow of money, businesses, baking and division of education etc.

Accounting and our society:

Society being an integral part of our lives has influences on individuals. So, among different components of a society the most important factor that is considered most effective one is finance. A well grown community has a good flow of finance between its residents, if a certain town is filled with all rich people and another town is filled with all poor, this will not give potential results to the society. At the same time mixture of rich and poor will give a decent sense of reliable life style where people will help each other and communicate for the sake of each other growth and development.

Accounting and Society

How does accounting help society?

Accounting helps a society in different (either direct or indirect) ways. In below bullets we get you impact of accounting, and benefits of how helpful it is to our society in detail:

  1. Accounting makes a society intelligent by getting education about it. This system helps people analyse, know and understand the factors that are affecting it. It is not just about money but also about division of different components or features like power distribution, land division and property related issues etc.
  2. Residents of society start getting jobs with the help of this domain. Not only jobs but accounting opens different works including businesses, banking and other areas where people can start their own ideas or do banking to earn handsome profit beyond limited income from jobs and it also gives ideas to people to do perform difficult in different ways with the help of logical reasoning.
  3. Logic is a key to build developmental steps to move on. Study of accounting helps in logic building, human beings can learn how to make budgets, how to make every day’s work plans and plan different activities to maximize the work and minimise the cost and energy of labour.
  4. Accounting department helps society by handling corporate finance and monetarily records. With the help of this education big companies and firms save a lot of time and regulate their finances else they would not be able stabilize themselves because displacement of records and corruption in liabilities would not be possible to handle without using accounting techniques on company resources.

Role of accounting in business:

Accounting is an important topic when it is about business. In business during taxation seasons; importance of accounting rises much. Because all the ins and outs of a company’s monetary resources and all other items are manipulated with the help of accounting knowledge. Accounting is helpful in generating financial statements from the company records.  Important financial statements that one can deduct from company records using accounting techniques are as followed:

  1. Income statements give you information about company’s profit and losses. It tell whether where we are standing at specific time of the year.
  2. Balance sheets give a clear and precise picture of financial position of a company with respect to particular time span.
  3. The cash flow statements act like a bridge between income statements, balance sheets. It acts as the ultimate reports during specific period of time.
Role of Accounting in Business

How does accounting helps Businesses?

Knowledge of accounting in business is helpful in knowing about different parameters and decision making. We understand either change in the strategies of the business or updating the structure to get more profit and clients. There are few important aspects in which accounting is helping business; given as:

  1. It helps in doing evaluation of business performance, it helps you to evaluate business performance.
  2. It helps in budget designing because in businesses budget is very important to consider while designing it precisely. If company will create a bad budget company can go under crisis.
  3. With the help of accounting you can see the future projection of company. You will be having all those necessary elements at all time. It would be allowing you to make decisions for future freely.
  4. You can regulate your taxes in time with the help of predefined accounting rules and get rid of extra fines. Rules will bind account department to pay all the taxes in time and you will get extra tensions.

Role of accounting in banking:

Banking systems consist of different entities that includes manager, investors, company representatives, government, employees, competitors and customers. These entities have association with each other. Some strategies and rules manage and regulate them. Accounting is a very helpful tool in regulating banking system. It acts as a spinal cord of any bank. Without it banks would not be able to survive and follow its lifecycle. Every year banks produce financial reports. Accounting helps in report generation to let the government know what government owns. Moreover, financial reports carry all the information that a bank needs. So in this way, accounting and banking are deeply related.

Accounting and Banking

In comparison with role of accounting on business and banking there is almost no dissimilarities in functionality of accounting. In business accounting helps in producing financial statements. Same happens in banking to pay taxes. It helps banking regulate its working structure and lifestyle.

You may like to read about “Defective Taxation System And Its Effects“.

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