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Accounting
Basics
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Accounting basics are necessary to understand
accounting:
The need for accounting has always
been the same: to
provide an accurate snapshot of a business for a certain point in time,
so management and others can make informed decisions.
There
are different types of accounting:
The basics
include such things as:
Accounting
is used by:
- Management of a company to control revenue and
expenses and improve efficiencies.
- Investors, creditors, and customers of a
business to determine if the business is in sound financial shape.
- Government taxing authorities.
Accounting is very important to the world of business.
Without it, the country and the world would not have much to
rely on to determine if a business is in good financial shape.
Can you
imagine a bank making a loan to a business without knowing what
their revenue and expenses are? Would you invest thousands of
dollars in company stock if you didn't understand their financial
position?
While there have been scandals such as Enron that have involved
misleading accounting, the system we have is continually improving and
evolving.
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