Accounting is termed as the language of businesses. Accounting in business plays a vital role as it provides so much information about the company, which helps to evaluate the company’s financial performance.
Role of Accounting in Business:
- Supporting the Stakeholders:
The purpose of accounting in business is to help the stakeholders make better business decisions by providing them with correct financial information about a company. More importantly, the Role of Accounting in business is to make sure that the stakeholders understand the significance of financial information, and they work with both peoples and organizations to help them use financial information to deal with business obstacles. Collecting and entering all the numbers and making the data is a simple part. The harder part is analyzing, interpreting, and communicating the information.
- Maintenance of WIP Control Account:
The Purpose of accounting services in Dubai business is to maintain the WIP Control account to know the status of Invoicing and the project progress. He should account for material related to that project, Labor Salary, etc. to that particular project through project accounting. He should know pre-costing and post-costing techniques to identify the variances etc. He should find it in advance before it slipped off from our budget. So, the maintenance of Books of accounts is not a simple task.
Importance of Accounting in business
To know about the company’s performance, we must record all the transactions. We can also opt for any accounting software based on our requirements, which are readily available in the market nowadays. For example, if you are a trading company, it is better to buy the software which is integrated with the inventory.
- Inventory Management and Accounting Software:
Inventory management will perform an indispensable role as far as a trading company is concerned. With the accounting software, you can check the inventory level at any point in time. The Importance of Accounting in business is to help us monitor inventory leakage, Stock levels, etc. The accounting software will support us with product costing, project costing, inventory management, Accounts receivable Ageing, Accounts Payable Ageing, etc. It will automatically generate the Profit & Loss Account, Balance Sheet, Cash Flow statements, etc.
- Accountant and Accounting Principles and Laws:
The Accountant/Person in charge of the accounts department must know the basic accounting principles and local laws about that industry / Company. For example, in the case of the construction industry, the owner may need information about a project. So, the accountant must enter the data based on project accounting. An accountant with sound knowledge is required for this task. Then only it will help you to manage the company without any issue. Maybe your supplier/customer may ask the SOA; then, you have to provide it. Maybe your banker may ask for some information related to the company, and then you should be in a position to offer it. To monitor the bank balance and to do the Bank reconciliation, you have to maintain proper books of accounts.