Why do we need accounting?

Accounting is the backbone of every business. It provides great arena for a business to grow and this is indispensable to get flourished in the business world. This practice had been started when the development occurred in trading and commerce. Italy is the first country practised and started recording all of their transaction details. They introduced the accounting entries to the world. The accounting work had been completed in the year of 1494 by a Venetian monk. Basically accounting meant to be an organized method of keeping all the records of transaction. The interesting thing is the concepts of assets, liabilities, reconcile and income are remains the same till now as created and these are the basics of today’s accounting.

Accounting highlights the snapshot of our financial deeds which really helps us to make a solid business decision about the future health of a business. With the help of the computer, accounting became much easier and lot of bookkeeping functions can be stored and utilized which is imperative to accounting. Accounting can be separated into two categories. They are financial accounting and managerial accounting. Financial accounting encompasses the information that is general public such as creditors, stockholders, customers and suppliers. Managerial accounting comprises the details that are confidential such as salary costs, profit targets, cost of goods produced etc.

The practice of accounting allows a business to hold accountable for the strategies used to run a business as it is evident that the possibilities of doing theft, greed and being dishonest exists in every business. It is possible to eliminate the fraudulence, when the areas of accounting implemented correctly. There are many accounting firms that can enforce the accounting areas properly which results the enormous profit. Generally, accounting resembles the people who are using them. It is as good as the people using them.

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