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The Importance of Accounting

Oct 31, 2008 646 Words
Accounting is an important means for an enterprise to implement efficient management, and the main basis to draft policies and plans. With the development of economy and the improvement of modern corporate system, the significance of accounting is becoming more and more obvious. This essay will discuss the main functions of accounting in business contest, thus prove that accounting is really essential and indispensable for an enterprise. Following this, it will explain why it is important for non-accounting professional and non-accounting students to have at least basic knowledge and understanding of accounting.

The main functions of accounting in business contest
There are many functions of accounting. The importance of accounting in business contest can be stated as follows: Firstly, accounting is an essential part of the whole enterprise management. There are many different departments in a company. The efficiency of the company’s management is not depended on the executives only, but the co-effect of all departments. Accounting is extensively, directly and continuously related to all departments and all business affairs in an enterprise. Therefore, accounting department is in the core position of the operation system. Only by making accounting one part of management, shall we improve the economic efficiency and expend our strength. Secondly, the information of accounting is the basis for decision making. The work of accounting is based on all kinds of information, such as National Economy and social development, and the result of their work should reflect the information. Generally speaking, the accuracy of the executives’ decision depends much on the accuracy of accounting information. The decision makers need accurate accounting information and overall analysis to ensure compatibility between production and sale, exploitation of the market, pricing, and investment of fund. Thirdly, accounting forecast is the foundation of business decision. When making business decisions, comprehending and foreseeing the change of the market is significant as well as mastering the present demand. The executives of an enterprise will foresee the potential demand and development of the market by making accounting analysis. On the other hand, they will analyze the past and present production and sale, and calculate the targeting ones of the future. By doing so, the decision made by the enterprise will be reliable and dependable. Fourthly, accounting analysis is an important guarantee for the business decision. Accounting analysis is not only the premise of planning, but also an important means to evaluate whether the plan is implemented appropriately and see some suggestions for improvement. Through the accounting analysis of the operation achievement, we can explore the potential approach of improving economic benefit and discover the weak segment of the management. Last but not least, the results of accounting are criteria to fix the accuracy of the business decision. Accounting results are quantitative display of the business results. They can reflect the state of business operating accurately.

The necessity for non-accountings to have basic knowledge of accounting Accounting is closely connected with all business affairs in an enterprise. It is essential and indispensable for the executives to make all kinds of decision. Consequently, it is really very necessary for non-accounting professional especially the executives to have at least basic knowledge and understanding of accounting. As the leader of the company, they should realize the important function of accounting, strengthen the position of accounting and support the work of accounting mentally, materially and financially. In addition, basic knowledge and understanding of accounting is also very important for non-accounting students who want to be successful in business field in the future. As some of the experts said, accounting is the basic language of business (Yoshiaki, 1990). Therefore, understanding the basic language is the basic element for success.

Conclusively, accounting is important in a business context and it is important for non-accounting students and professional to have at least basic knowledge and understanding of accounting.

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