Importance of accounting in business
Most people think accounting is an unnecessary cost to business, while true businessmen understand that accounting is a tool that helps them understand the outcomes of their past business decisions and make even better decisions for the future. You may be running a successful business with a high turnover, but if you're not accounting for transactions at least monthly, there may be events that could adversely impact your business processes or profitability. For instance, if you've taken a loan at 15% per annum for day-to-day expenses or working capital, from a financial perspective, you need to generate income greater than 15% on the loan amount to ensure profitability. Otherwise, the decision could result in losses and increased cash outflow. If a single production cycle yields only 7% on the amount invested in working capital or production of goods, you'll need more than two cycles in a year. However, this necessitates timely payments from customers so that cash from