Accounting Department Research project Topic Chapter 1-5 titled – Importance of Book Keeping And Other Financial Statements In An Organization.
1.1 Background to the Study
Accounting standards are needed so that financial statements will be fairly and consistently describe as a financial performance. Without standards, users of financial statements would need to learn the accounting rules of each company, and comparisons between companies would be difficult. While keeping track of your business’s finances may seem overwhelming, it’s not that hard when you know the bases of accounting and bookkeeping. Bookkeeping and accounting share two basic goals:
- To keep track of your income and expenses this would improve your chances of making profit.
- To collect the financial information necessary for filling your various tax returns. This sound pretty simple, it can be, especially if you remind yourself of these two goals whenever you feel overwhelmed by the details of keeping your financial records Wang, Hartmann, Gibbs &Cauley, (2009).
There is no requirement that your records be kept in any particular way. As long as your records accurately reflect your business’s income and expenses, the IFRS will find them acceptable. The actual process of keeping accounting books is easy to understand when broken down into three steps.
- Keep receipts or other acceptable records of every payment to and every expenditure by your business.
- Summarize your income and expenditure records on some periodic basis (daily, weekly, or monthly)
iii. Use your summaries to create financial reports that will tell you specific information about your business, such as how much monthly profit you are making or how much your business is worth at a specific point in time.
Whether these are done by hand on ledger sheets or use accounting software, these principles are exactly the same.