P1: Describe the purpose of accounting for an organization.
What is the purpose of accounting?
1- To record all transaction ( Accurate records help the company in ) : Pay bills smoothly
Collect receivables early
Easy to prepare reports
Help in calculating tax
2- Help the manager to take decision
Accounting helps the manager to make sure there is enough money to pay for liabilities and take a decision regarding daily and monthly expenses.
3- Help the manager in monitoring
Accounting helps the company in keeping eye on the expenses and sales on a daily basis to ensure there is enough money to pay bills
4- Help the manager in controlling
Accurate record + monitoring = controlling
Because up dating information will indicate if there is increase in expenses and need to be reduced.
5- Help in calculating net profit
Recording transaction help in preparing income statement that calculate net income us follows: Revenue – Expenses = net profit/loss
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