The Importance of Accounting Software for Business
To the ordinary person, accounting might look like a collection of additions and subtractions based on the company’s income and expenses. In a way, there is nothing wrong with that thinking. But, on the other hand, accounting has a far more important role than just looking at income and expenses.
Understanding the Role of Accounting in Business
Accounting is a crucial weapon in determining important company policies. The expression was stated by Professor Michael A. Roberto, senior lecturer in accounting and real estate from the University of California. He said that accounting reports can predict and even prevent the bankruptcy of a business.
For example, when the giant financial firm Lehman Brothers declared bankruptcy in 2008. That should not surprise investors. Their 2007 financial statements showed that Lehman Brothers’ liabilities and debts had reached 97% of the assets they reported.
Regarding the issue, Professor Roberto said,
“At the very least, the accounting results state clearly and strongly that the company must recapitulate, reduce debt, and strengthen its financial position. “
Finally, Professor Roberto concluded, “There is one clear message. It is our duty to understand the accounting and financial reports of the companies we invest in. “
Accounting has become a necessity if you enter the business world. But, in reality, not everyone does the accounting process properly or even does the accounting at all. The reason can be various kinds.
Starting from saving costs by not hiring accountants, always forgetting to collect evidence of transactions, to not understanding how to keep books.
Fortunately, technological development can help solve a number of the problems above. Today, online accounting software is widely available to assist entrepreneurs in monitoring the financial condition of their businesses.