Every business requires its own performance examination, data, records, analysis etc which is why accounting is an integral part of every business. Accounting gives the management information regarding the financial performance (Statement of Comprehensive Income) and financial position (Statement of Financial Position) which is integral for the stakeholder to understand the health of the business. Accounting has basically 2 methods – Single entry and double entry. Double entry is the most widely used method whereas single entry is for very small scale businessmen where accounting merely means income less expenses.
Some of the areas accounting helps a business in are as follows:
- Planning and formulating strategies in the future based on past and current performances
- It helps in coordinating various business factors such as inventory procurement
- Brings better control of resources into the business
- It a medium of communicating the state of affairs of the business, in terms of numbers
- It helps in formulating budgets
- The accountant is the position to give valuable advice
- Comparison becomes easier
- Ensuring Law of land is adequately followed
The IASB (International Accounting Standards Board) is an independent, private-sector body that develops and approves IFRS (International Financial Reporting Standards) that provides certain principles for accounting. They specify how a business should maintain its books of records to ensure consistency, transparency, and comparability. It was established to create a common accounting language.