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.