Accounting is a process which gives way to the rise and fall of companies, organizations etc. It is imperative because it lets company owners know about their liabilities towards profits and losses. It helps them make decisions on whether to invest further on projects or not.
Clear accounts of an organization or a company determine its position in the market having a great influence on its image in the economy.1
Balancing the books is diction of business. Making balance sheets lets you know about how much monetary strength you possess after taking out expenses like debt to creditors, employee salaries and equipment repair etc. these also include cash flow with profit and loss statements.
There are various types of accounting which are financial, management and open-book tax accounting etc.
For maintaining your financial records, your account should first make a draft, a kind of a mission statement that would contain the organization’s aims and mottos. This will also give a brief introduction of your organization and what it does, e.g. its total revenue, personnel employed etc.
The statement will give way to key planning ideas. This will include figures of all the debit and credit endured by the organization within the last two or three years. Furthermore, it will inform the shareholders of the gains they are making and the pace at which their money is invested and returned.2
On the other hand, if previous fiscal numbers are not good, the board of directors can take decisions on increasing the figures, e.g. increasing or decreasing the number of people employed in the company and changing old equipment that’s making the manufacturing process slower.
Keeping financial records will also ensure that the company is free from debts of the banks and is allowed to borrow more. Accounting gives an overall view of all aspects of an organization from its labor value to the market product value and the chief operatives involved in it.