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The importance of Accounting in a Company.


Keeping an account is essential for the proper management of a business. Not only is it legally obligatory for any company, but it is also indispensable for the various analyzes that will help the various decisions in order to make the activity prosper. The accounting of a company must therefore follow certain standards so that the financial information it produces is exploitable but also valid in the eyes of the law.


The different functions of Accounting within a Company

The accounting of a company must be held by qualified people to ensure that it is done correctly to accurately represent the reality. Indeed, accounting is primarily a management tool. The reliability of accounting information is therefore essential to enable executives to effectively manage the business. The roles of accounting are to consolidate and coordinate, but also to inspect all financial data in order to provide business leaders with reliable elements to enable them to make the best decisions based on the conjuncture.


The roles of accounting are to consolidate and coordinate, but also to inspect all financial data in order to provide business leaders with reliable elements to enable them to make the best decisions based on the conjuncture. For this, the basic function of an accountant is to enter accounting information and ensure its veracity through the reconciliation of physical and financial flows. Properly maintained accounting must allow the reconciliation of the financial information collected with the various financial transactions actually carried out, that is to say with the operations that are at their origin. In particular: sales, purchases and investments. Real-life information also allows for better management of a company's cash flow.


The Obligatory Criteria of the Accountant of a Company to Facilitate its good Management

An Accountant must follow rules defined by law, but also be consistent with accounting principles. Accounting information has to satisfy many qualities not only to allow the proper management of a business, but also to be legally compliant. The first mandatory criterion of accounting is comparability. This means that the information entered in the various accounts must make it possible to compare the financial data both in time and in space. The second criterion and reliability. It is obvious that to be reliable, the financial data entered as accounting information must not contain any errors.


Accounting information must not only be reliable, but must also be true to reality. This is the third criterion which is sincerity. This implies that the recording of the different events during the financial year must allow the different accounts to represent their reality and their importance. The bookkeeping of a company must also be done with rigor. Regularity is the fourth criterion. Indeed, the financial information must comply with the rules and procedures in force. The accounting information produced must also be comprehensible to readers. The fifth criterion is the clarity of accounting information. Accounting information is not just for specialists in this field. They must also be understood by an audience with reasonable business knowledge. Finally, the sixth and final criterion is cost.


Indeed, the costs generated by the accounting of a company should not be excessive compared to the value it brings to management. In other words, the cost of a company's accounting must not be greater than its value. Accounting is notably governed by the Commercial Code, which makes it obligatory to keep accurate and regular annual accounts in order to give a true and fair view of the financial health of a company and its assets.


AHW

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