purpose-of-accounting

The purpose of accounting

At present, accounting became an indispensable part of commercial relations. It is unthinkable to want to create a company without taking into account the accounting part. In fact, without fear of sounding too alarming, without the figure of an accountant, your money may be at risk.

Knowing the purpose of accounting will help you to be more prepared to face this financial area. As you already know, accounting is a fundamental part to ensure the proper functioning of any company. This is why knowing its purpose will help you understand it and apply it better in your business.

Deepening the purpose of accounting

To deepen the purpose of accounting, it is necessary to know its definition and better understand the subsequent concepts.

What is accountability?

When we speak of accounting, we refer to an area of finance that specializes in the analysis, recording and control of income, expenses and other economic operations within a company.

The figure of the accountant is essential to be able to accurately reflect the financial movements of a company or person. Currently, almost all of us at some point in our life will need an accountant so we do not have a company.

What is the purpose of accounting?

If we were to make a conclusion about the purpose of accounting, roughly we can say that it is to provide financial information about an organization, company or person.

However, this would leave aside specific aspects that explain why no company should do without a professional in accounting.

Purposes of accounting

  • Really record all the movements of a company or organization.
  • Control each of the obligations and resources of a company, in order to be clear and organized everything related to the finances of it.
  • The professional in accounting must be able to reflect at any time the financial situation of the company. This is why without it, companies can easily lose their way.
  • Provide information that allows creating predictions about the financial future of the company, in order to project achievable goals based on current conditions.

Accounting categories

To understand this much better, it is necessary to delve into the categories of accounting, which help us to understand the whole picture.

In accounting, we talk about three fundamental categories: business accounting, public accounting, social accounting.

The business accounting analyzes the business relationships of a company or individual within the framework of its financial situation, this in turn, is divided into two branches that are financial accounting, which records the operations in a systematic way in order to synthesize them in the states financial, and cost accounting or management whose main objective is to analyze financial movements within the company in order to objectively influence decision making.

The public accounting, meanwhile, is responsible for controlling state spending. In this way, he specializes in processes of analysis, measurement, information and control of public administration.

Finally, social accounting aims to manage the obligations of individuals and the state and their relationships.

If we venture to make a synthesis about the purposes of accounting, we can say that the main verbs are analyzed, manage, predict, evidence and control the financial area of any company or person.

In this same sense, it is important to highlight that thanks to the data provided by accounting it is possible to measure the behaviour of economic activities within a country.

It is for all this that accounting is an important part of history since time immemorial, and although it was implemented in a rudimentary way by civilizations like the Egyptian, it has evolved along with humanity to be able to respond to the particular needs of each time.

As you see, the purpose of accounting is quite clear considering the specific areas where it is applied. After knowing this, you must already be convinced that the processes in the accounting framework should be a fundamental part of the development strategies of your company.

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