Importance of Book-keeping in Business Information
Permanent and Consistent Record: Book-keeping provides eternal evidence for all business transactions, replacing the recollection which fails to keep in mind everything.
Ascertainment of Economic Situation: It is not sufficient to know the profit or loss; the manager should have a complete image of his economic situation in business. Once the complete image (a specific period) is recognized, this helps him to preparation for the next year’s dealing.
Control over Assets: In the way of business, the manager acquires different assets like building, equipment, furniture’s, etc. He has to maintain a test over them and find out their standards year after year.
Mathematical Accurateness of the Accounts: With the assist of book keeping trial balance can be without doubt organized. This is used to test the mathematical accurateness of accounts.
Net Result of Business Operations: The consequence (Profit or Loss) of business can be properly calculated.
Estimate of Dues: For definite transactions expenses might be made later. Therefore, the owner has to recognize how much he has to pay others.
Control over Borrowings: Many owners have a loan of from banks and further sources. These loans are repayable. Just as he ought to control over assets, he should have control over liabilities.
Ascertainment of the Progress of Business: When a owner prepares economic statements every year, he will be in a situation to evaluate the statements. This will facilitate him to determine the development of his business. Thus book keeping enables a long assortment preparation of business activities besides pleasing the short term purpose of calculation of yearly earnings or losses.
Taxation: Business owners pay sales tax, income tax, etc. The tax authorities necessitate them to present their accounts. For this reason, they have to keep a record of all their dealing transactions.
Legal Requirements: Claims alongside and for the firm in relation to outsiders can be confirmed and established by producing the records as evidence in the court.