The Role of Accounting and Accountant in Business

Accounting has been said as the language of a business. While a business involves many financial activities, accounting is strongly needed to record these financial activities so that financial information can be disclosed fairly and reliably.

What is the Role of Accounting in Business?

The first and foremost role of accounting in a business is to help internal and external parties of a business make good business decisions. How does accounting relate to decision making in a business? Accounting is the language that is used to describe financial position and health of an entity. In its simplest form, accounting can be translated as bookkeeping processes. When accounting is organized in a business, every financial activity in the business is recorded. These financial activities, in the end of the business period, will sum into several amounts that show how financially healthy a business is. This financial information is what is needed by the internal and external parties of a business to create a better business decision.

What is the Role of An Accountant in Business?

Basically, every person can organize accounting. In other words, every person who is able to run a business should also be able to be the accountant of his business. The most basic activity of accounting is recording the inflows and outflows of assets in the business. For example, by recording the cash inflows and outflows of a business, you actually have been doing an accounting activity. However, the role of an accountant in a business grows in line with the size of a business. Of course, if you are starting a home based business, you do not have to hire a certified accountant. You can be just the accountant of your own business. But, if you started a partnership or a company, a certified accountant may be necessary.

The Characteristics of a Business

Sometimes people do some activities without actually know if those activities are a form of business or not. That brings us to the basic characteristics of a business. What are the characteristics of a business? Here are several main characteristics of a business that distinguishes it from other kinds of activities.

Financial Activity:In a business, there must be some financial activities going. Some financial activities involved in a business include cash inflows and outflows, purchase of assets, insurance payments, or leasing. These kinds of financial activities are vital for a business because it is the wheel that runs a business.

Going Concern:A business is started with a vision that it will run forever. A business should be a continuous process that hopefully will not stop. It means that a business is never a single time process; instead, a business is a multiple time process that runs for a long period.

Aiming for Profits:What is the goal that every business tries so hard to achieve? Well, the one and only aim of a business musts be profits. Except for nonprofit businesses, no other kinds of business are created without aiming for profits. Profits are the only thing that will be achieved when a business is started.

Risks and Returns:No business will ever run smoothly. There are many decisions should be made in the run of a business. These decisions are made to tackle any kinds of risks that may block a business to actually run for any longer term. However, the greater the risk that a business will face, the bigger the return or the rewards that the business may get.

Customer Oriented:The customer is the only wheel of a business that brings profits. That is why a business is always oriented to its customers. There is a special relation to a business and its customer that should be kept sustained.