Effective communication is important in business dealing with employees and outsiders, such as vendors and clients. Because accounting is an intrinsic part of any business, good communication skills are vital in this area. Important financial tasks such as budget preparation and reporting, bill paying, payroll and recording income need to be presented properly to management and others to be useful and meaningful. Ads by Google
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The most important use of accounting data is to communicate meaningful information, allowing management to make good decisions. To be effective, accounting information must make sense and be understood.; or else, it is just a list of numbers with no real significance. Many businesses use templates for internal reports to communicate information in a matter that is familiar and easy to use by management. For example, departments may get "actual versus budget" reports every month, using the same format, facilitating understanding and analysis. Investors
Another important user of accounting information is the investor, who wants to know how a business is doing financially. Usually this type of information is communicated through standard reports, such as balance sheets and income statements, compiled using generally accepted accounting principles. A balance sheet shows assets, including cash, liabilities and owner's equity. An income statement presents income and expenses of a business at a certain point in time. Both statements are compiled the same way every month or period, allowing for comparability and analysis, from an investor's point of view. Many investors may also want to see cash flow statements with information about money coming in and going out in a business. They may also request special reporting. Related Reading: Effective Communication & Leadership
Accounting information needs to...
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