Accounting is considered the language of business. It is a service action, which role is to provide quantitative information, mainly financial in nature, regarding economic entities, that is anticipated to be helpful in making an economic decision. It helps business holders and other users to make a knowledgeable judgment and better decisions, through the financial information it provides.
Importance of Accounting in Planning
Appropriate planning is very much required for successful achievement of various management actions.
This planning’s cash planning, sales forecasting, procurement planning, determining the quantity of stock, development planning, fixing up target-profit etc. are greatly reliant on accounting data and information.
Accounting Importance in Organization
Accounting plays a very vital role in the proper execution of the important functions of management organization.
Accounting helps management by giving information like profit percentage over the capital, capital investment position, management efficiency in controlling etc.
Accounting Importance of Motivation
Labor-employees are to be provoked for achieving estimated performance. Financial return is one of the main motivating factors of work.
The management is to be conscious of the financial position of the business for giving financial benefits. Accounting helps the management by providing necessary information for taking proper decisions.
Accounting Importance of Co-ordination
One of the key functions of management is to attain the final goal of the business by coordinating various actions of different departments. Accounting helps in coordinating various actions of different departments of the business.
It also helps the management in the tuning of purchase with sales, expenses with income, sales with debt receivable realization etc. to a great level.
Accounting Importance of Control
The main functions of the management are planning and controlling. Controlling is important for the achievement of actions 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 of different departments, business, and management plan of actions to various departments.
For example, in the modern 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 necessary to run the business effectively. The historical information which is required in preparation of the budget is supplied by Accounting.
Accounting gives the information that enables the management to make the important decisions for the business. Accounting is an essential tool for the management as it’s regarded as the “Language of Business”.