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7 Benefits of Accounting in Everyday Life, You Must Know

Merdeka.com – It cannot be denied that many economic activities in daily activities require accounting calculations. Accounting itself is important because with accounting, economic calculations become easier.

Most people use accounting in their daily lives to facilitate their business activities. Without accounting, economic activity will run slowly in either private or public (government) companies. If this is the case, then the economy will not grow well.

The benefits of accounting in everyday life cannot be denied that it has many impacts on our economic activities. However, there are actually other benefits that we may not have realized directly.

Reporting from the Lecturer in Accounting, here we have summarized the 7 benefits of accounting in everyday life.

Understanding of Accounting

economic illustration

© 2014 Merdeka.com/Shutterstock/Sergey Nivens

Before we know about the benefits of accounting, it’s good to know what it means in general. Accounting itself can be interpreted as the activity of recording the financial cycle.

In a broader sense, accounting itself is a series of activities in recording measuring, identifying, presenting and reporting financial transaction activities. Its own function is to produce financial information that can be read and understood by interested parties.

Role of Accounting

1. As a measure of the company’s progress. From a well-structured, neat and correct accounting process in accordance with existing transaction evidences, the company can be categorized as a good company. Vice versa.

2. As an information system that can produce financial reports and is also useful for parties with an interest in the condition and existence of the company’s economic activities.

3. In relation to the nation’s economic activity, the tax of a company that must be fulfilled by the state can also be calculated using accounting.

4. As a consideration tool for domestic or foreign investors who wish to invest in a company.

5. Tools to detect and prevent abuse corruption or misuse of funds in a private or government company.

Benefits of Accounting

1. As a means of planning, coordination, supervision and control

The first benefit of accounting is that it can be used as a reporting tool for managers who are internal parties in a direct relationship with companies that need financial information presented through the accounting process for planning, coordination, supervision, and control of the company’s financial and condition.

2. Means of Planning and Determining Company Activities

The next benefit of accounting is as a means of planning and determining what the company’s activities are. The financial statements themselves will present data on cash and non-cash assets from the company. For operational purposes, the company requires asset data so that it is valid and accurate about the company’s liquidity conditions.

So that with this clearly planned it can be determined whether the company is able to make purchases, pay debts, and allocate other economic resources.

3. Basis for Calculating Taxes

The next benefit of accounting is as a basis for calculating taxes. The company itself has the obligation to pay taxes to the state. The amount of tax that must be met will be adjusted to the conditions of the company’s profits.
Profits or profits that have been obtained by the company in a certain period will be known through the accounting process. In addition, corporate tax policies will also be determined by analyzing financial reports.

4. To Obtain Loans from Creditors

The next benefit of accounting is as a means of obtaining loans from creditors. Creditors as a means of borrowing capital will usually have certain requirements such as the company’s liquidity ratio which must be good. This ratio can later be calculated through the existence of financial reports.

The trick is to compare assets to current debt in short. Later, these creditors could be from banking institutions or other institutions.

5. Providing Financial Information for Investors

In economic activity, of course all parties will be careful when making investments, including investors. The benefit of accounting itself in this process is that it can provide financial information to investors.

Investors will usually be interested in investing a large amount of money. Therefore, it takes a vigilant attitude and careful consideration to decide whether an investor himself will turn over his money or not to a company.

6. Become a material for consideration for Business Partners

The next benefit of accounting is as a consideration for someone whether in the future another company that has an unfavorable financial condition will be able to determine because it can cause harm to us. This is clear because the company wants to benefit from every business relationship. So the condition of a company is good or not reflected in its financial statements.

7. Is a Tool of Accountability

The last benefit of accounting is as a tool of accountability. The responsibility itself starts from the manager who determines the policies relating to the company’s operational activities, including financial policies. These policies are running well or not, can be easily identified through the company’s financial statements at the end of the period.