Riaz Academy
Question is that, Why we need to keep the record of business? In response of this, we can say that those who invest their capital or any one or some of them devote their efforts in their business expect that they all receive a return in the form of profit. Moreover, if they employ professoinals and experts so that they can maximize profits and minimize losses, by their efficeincies.
In order to maximize profits and minimize losses there must be a proper record of all events and transactions of the business so that at the end of a period, the owner of the business can have knowledge about:
In order to maximize profits and minimize losses there must be a proper record of all events and transactions of the business so that at the end of a period, the owner of the business can have knowledge about:
- The gross profti on trading (purchase and sale of merchandise)
- The net profit or loss after checking of all paid or unpaid expenses
- The value of each and all assets
- Short term and long term liabilities
- The owner’s equity
In a nut-shell, if there is proper record, the owner can see the correct report of his business at any time at a glance and after a certain period. He can, not only judge the progress of his business, but he can make budgeting for future with the help of recorded facts and figures. So, Accounting is the essence of business, without it, no one can run and operate business smoothly and efficiently.