The Importance of

Accounting for
Business
Prepared For
Dr. Md. Rashidul Islam
Ph. D (DUFE), M. Sc (UK), MBA (RU)
Associate Professor of Accounting, DBA
East West University

Prepared By

Tofatul Jannat Mona

Student ID: 2023-2-95-008
 Background Information of The Entrepreneur

▸ A very successful entrepreneur/businessman with multiple businesses.

• Grocery Business
• Worker Supply to Construction sites
• Workshop for Electric Appliances (Fridge, Washing Machine & Air Cooler)

▸ Economic information available

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 Analyzing the Profitability of Businesses

▸ Only personal asset data provided.

▸ No individual business data can be tracked from the provided data.
▸ There is a risk of some business making loss as data is not tracked.

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 Need for Accounting in Business

▸ Highlight Financial Health.

▸ Decision-Making Support.
▸ Legal Compliance.
▸ Proper Taxation of Business.
▸ Setting Up Pension Fund for Em ployees.
▸ Business Growth.
▸ Track Expenses.
▸ Risk Management.
▸ Long-Term Success.

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 Uses of Accounting in Business

▸ Avoidance of the limitation of memorizing power.

▸ Compliance of Statutory provisions.
▸ Ascertainment of profit and loss of the business.
▸ Ascertainment of the financial position of the business.
▸ Assessment of Tax.
▸ Knowledge of Debtors and Creditors.
▸ Proper Valuation of Business.
▸ Evidence in The Court of Law.
▸ Assistance in Making Managerial Decisions.
▸ Development of Nation.

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 Chart of Accounts

▸ Asset Accounts: These accounts represent the resources and properties

owned by the organization.
▸ Liability Accounts: These accounts represent the organization's
obligations or debts to external parties.
▸ Equity Accounts: These accounts represent the owner's equity in the
organization, including investments and retained earnings.
▸ Income Accounts: These accounts record the revenue generated by the
organization from its primary activities.
▸ Expense Accounts: These accounts record the costs and expenses
incurred by the organization to generate revenue.

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 Financial Statement Analysis & Framework
The financial statement analysis framework consists of the following six steps:
▸ Define the purpose and context of the analysis.
▸ Collect data.
▸ Process the data.
▸ Analyze and interpret the processed data.
▸ Develop and communicate conclusions.
▸ Follow up.

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Thanks!