The Importance of Accounting

1) It helps to establish the Co-ordination of a company

- Accounting helps in coordinating various activities of different departments of the
business and also the management in the adjustment of purchase with sales, an
expenditure with income, sales with debt receivable realization, etc. to a great extent.
- The accounting information also contributes to the measurement of company’s
financial indicators, developing of financial and economic processes, evaluating of
self-financing and generating cash capacity (Munteanu, berechet, Scarlat, 2016).

2) It helps managers make decisions about assembling resources, controlling, and

organizing financing and operating activities

- In order to adapt and succeed in the market changes, companies use various business
strategies which are business firms that are more familiar with the external
environment, know their short comings and benefits, and have more opportunities to
make effective changes to their strategies, and are much more flexible (Valentavičius,
2009).

- For example,

1) It helps to establish a baseline of the company

- In order to adapt and succeed in the market changes, companies use various business
strategies.
- Keeping records of the company’s general overhead from the start gives a better
idea of how much income it will need to take the company to the next level. In
addition, it will be able to set realistic goals for new business. Without reliable
accounting, it is tricky to budget the growing business.
- In business, the success of a project or product is often measured against a baseline
number for costs, sales, or any number of other variables but a project may exceed a
baseline number or fail to meet it.
- In order to measure the success of product line, Nestle have used the number of
units sold during the first year as a baseline against which subsequent annual sales are
measured. The baseline serves as the starting point against which all future sales are
measured. (Nestle Annual Report, 2017)
- For example, Nestle have recorded the The GHG emission reduction (CO2) from
Project Double compares the reductions to a baseline of the transportation of MILO
1Kg. (Nestle Annual Report, 2017)