Nama: SANDRI M.

AL IRSYAD

Nim: 2210552025

Kelas: M1

Mapel: English | Tugas Financial Accounting

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Whay is accounting is important in busisnes

Accounting is also called the language of business because of its ability to communicate
financial information about an organization. In the business world, accounting has a very important
role because it can provide accurate and reliable financial information to users of that information.
Various interested parties such as managers, potential investors, creditors and the government
depend on a company's accounting system to help them make sound financial decisions. Therefore,
an effective accounting system must include collecting, recording, classifying, summarizing,
interpreting, and reporting accurate information about the financial status of an organization. Apart
from that, there are three reasons why accounting is important in business; assisting in planning and
decision making, assisting in cost control, and assisting in assessing the company's financial
performance.

For the first reason accounting helps in planning and decision making. Cash in (revenue) and
cash out (disbursement) are carefully monitored, and transactions are summarized in financial
reports, which reflect the main financial activities of an organization. By presenting accurate financial
reports, companies can understand their financial condition and make the right decisions to develop
their business for the future. For example, a company can use the income statement to determine
the most profitable products and allocate resources accordingly. If a product is profitable then the
company can take steps to produce more or vice versa if the company experiences a loss then the
company can take steps earlier to overcome it.

For the second reason accounting helps in controlling costs. By knowing the costs associated
with each business activity, companies can control costs and increase their profitability. This will help
companies to make informed decisions about how to manage costs and improve efficiency. For
example, a company can use a one-time expense report to determine the costs associated with each
project or product, thereby making a decision about whether or not the project or product is worth
continuing. In addition, the existence of a product cost report will make it easier for companies to
determine the price of a product and calculate the profit percentage that the company wants.

The last reason accounting will help in assessing the company's financial performance. By
presenting accurate financial reports, companies can assess the company's overall financial
performance and identify areas that need improvement. Financial reports enable interested parties
such as investors and investors to compare one organization with another and/or to compare
accounting periods within an organization. For example, an investor can compare the latest income
statements of two companies and see which investment is more profitable to invest in and a stock
buyer can calculate which company will grow rapidly and will be profitable for him in the future.

It can be concluded that accounting plays a very important role in business. As well as
assisting in planning, decision making, cost control, and assessing a company's financial
performance, accounting is also a source of accurate and reliable financial information that
businesses need to operate effectively and efficiently. Accounting also assists in managing business
risks by producing accurate financial reports, which can assist businesses in making the right
decisions in dealing with potential risks. Accounting also assists in managing business risks by
producing accurate financial reports, which can assist businesses in making the right decisions in
dealing with potential risks. Apart from that, accounting also helps in fulfilling legal obligations, such
as paying taxes and proper financial reporting. Thus it can be concluded that accounting is an
element that cannot be separated from business continuity and is an important factor that can
influence the success of a business.