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1. ACCOUNTING FOR PARTNERSHIPS
9. COMPUTERIZED ACCOUNTING SYSTEM
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IMPORTANCE OF ACCOUNTING – PART 2
4. Communicates results
Accounting helps to communicate company results to
various users. Investors, lenders,
and other creditors are
the primary external users of accounting information. Investors may be deciding
to buy shares in the company, while lenders need to analyse their risk in
deciding to lend. It is important for companies to establish credibility with
these external users through relevant and reliable accounting information.
5. Keeping
Records
Every business needs to keep records and act upon them in order to run
smoothly. In this case, accounting plays a big role in keeping records. All
records are collected, organized, and interpreted in order to be communicated
to the end users, therefore helping in making an economically viable decision
which will lead to the positive productivity of the business organization.
6. Filing and managing taxes
Accounting allows businesses to keep track of all
income sources, deductions and expenses so that they can accurately report
their earnings to the IRS. An accounting team can help a business determine how much
tax it owes, how to pay any owed taxes and how to prevent negative actions on
behalf of the IRS, like audits or penalties for improper taxation or filings.
Accountants also keep proper tax records in case of an audit.