The Important of Keeping Financial Records with Accounting

711 WordsJan 25, 20183 Pages
The meaning and importance of the accounting Accounting by definition from Merriam-Webster dictionary is “the skill, system, or job of keeping the financial records of a business or a person” (A) or according to investopedia “the systematic and comprehensive recording of financial transactions pertaining to a business” (B). These two do not show though, how important the accounting is for the company and how strongly it can influence the firm’s position in the stock market and investors’ approach towards it. While some definitions might be underestimating the significance of this process, the truth is that accounting is one of the key functions for almost every business. As a technique designed to record, classify and summarize a company’s business operations, with the aim of providing information for decision-making purposes, the accounting process generates the financial statements, which are fundamental for analysing a company and assessing its historical performance. Financial statements are a structured representation of the financial position and financial performance of an entity and their objective is to provide information about both of them. The information given should be useful to a wide range of users in making economic decisions. Financial statements also show the results of how well the resources of the entity have been managed. Those of Limited Companies are publicly available, provided to shareholders as well as Companies House, where available for all
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