October 17, 2008
When starting a new business there are several things to take into account like how do you measure whether your business is making or losing money? Or how should you know where to ascertain funds to finance expansion, should you borrow money, issue stock, or become the primary investor and use your own money? In order to achieve success in the business world requires constant decision, and the best decisions that are made are based off financial information. And with this in mind, accounting is the information system that identifies, records, and communicates the economic events of an organization to interested users. Companies across America use accounting principles in order to promote good business ethics and to determine how their company financially stands against competitors in the non stop world of business. For this reason, accounting is a very crucial aspect of creating a successful business that will prosper.
Today’s form of accounting applies to all fields of business. Whether it’s marketing, finance, or real estate, accounting systems help people to be sensitive to costs and benefits and also help them understand accounting data in order to make wise business decisions. When a company is just starting up, its operators need to decide what audience of users they need to apply to, whether it’s internal users or external users. The latter addresses investors or creditors and the former applies focuses mainly on business managers. Both of whom have an interest in knowing about the ongoing activities of the business. Internal users use accounting to provide internal reports, such as comparisons of alternative operating finances, or approximations of cash needs for the next year. All of this financial information is presented in a summarized audit that is in the form of financial statements. Businesses maintain accounting systems in order to promote good...