BTEC Business Level 3 Unite 5 Business accounting P 1

Topics: Management, Business, Bank Pages: 2 (724 words) Published: November 29, 2014
To: Capello Design
From: Xin Huang
Date: 23th October 2014
Subject: Describe the purpose of accounting for an organisation. I am writing this report with the intention of explaining what is the purpose of accounting in an organisation and why is it so important to record transactions. Purpose of accounting includes many elements, such as recording of financial transactions, planned or actual, and the use of these figures to produce financial information. It is really important that the organisation to keep accurate and up to date accounting records. These help the owners of organisation to manage their affairs properly and enable outside stakeholders to assess how well the business is performing. There are some reasons to keep good accounting, 1. Enables you to manage your business and make it grow, because no one knows your business better than you do, but reliable information can only be extracted from the records you keep. If you don’t have good records, it’s much harder to make good decisions. 2. Make it easy to prepare management accounts. Management account helps you to know how your business is performing, with management accounts you can compare one period with another, this year with previous year. 3. Keep good accounting makes you easier to get a bank loan or overdraft. Banks like it when you seek an overdraft for the right reason and at the right time. In a business, the accounting department provides accounting service and financial support to the business. Accounting consists in reporting every financial information regarding to this business performance, how much the funds is flowing in and out of a company. Businesses should recording of financial transactions because it will help the owners to make decisions related to the management of the business. The management of the business is really important, the business needs to set targets and in order to reach them everything needs to be well planned, organized and monitored all the...
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