The Need and Importance of Financial Accounting

The Need and Importance of Financial Accounting from Fareed Siddiqui, BBA, MBA-Fin, MPhil-Fin, (PhD)

Accounting is very much connected with our personal lives in so far as it is in respect of every business. We all with intent or unknowingly generate accounting ideas in a way when we plan what we will do with money. We need to plan how much money will be spent whilst how much of it will be kept back.

Being known as "The Language of business", accounting is the basic need of a business organization to find out where it stands. It is of great essence to provide the basis for planning and budgeting while dealing with measurement of economic activities and communicating financial information to the users for business decision making. It is also meant for protecting the properties of business and communicating the results obtained from the financial statements to the intended parties like share holders, debtors, creditors, and investors while meeting the legal requirements.  Accounting is included in those fields that are growing faster in this era. It is dynamic at the present time and meets the growing demands of trade, commerce and industry. It is appropriate to mention here that the advent of industrial revolution and technological advancements have given rise to widen more business prospects at the same time as bringing about  change in the domain of accounting by which it has now begun to be known as a tool of management for planning and controlling process. Thus, it can be rightly said, in the present day and age, no economic activity can be carried out successfully with no thought of accounting.

According to American accounting association, accounting has been defined as, “The process of identifying, measuring, and communicating information to permit judgment and decision by the users.” Yet another definition of American Institute of Certified Public Accountants (AICPA) is that “Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character and interpreting the results thereof.”

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Written by:

K. A. Fareed (Fareed Siddiqui)

Writer, Trainer, Author, Blogger, Software Developer

BBA, MBA-Finance, MPhil-Financial Management, (MSc-Software Engineering)

(PhD-Management)

MA-English, MPhil-English

Post Graduate Diploma in Computer Applications and Programming

Certificate course in English language proficiency

Level 1 – Leadership and Management ILM – UK

Pursuing CMA-USA

Individual Member of Institute of Management Consultants of India