Basic business and financial data, when well analyzed, interpreted and presented by competent professionals will help the business produce Financial Metrics used to evaluate financial performance, health and stability of a business
By Nwokolo I. Charles
Accounting serves as information system. It is the language of business. It is a process by which all financial transactions relating to economic activities of a business enterprise are measured, analyzed, interpreted and communicated to interested users for decision making process which results in more efficient operations and proper assessment of performance.
The major activities of any business are production and distributions, finance, marketing, management and operations. Processing and keeping records of these business activities are very essential. Bookkeeping is the technique of recording, classifying and summarizing business transactions. It involves maintaining chart of Accounts; Ledger Accounts and Journal Entries for reference and account validations.
It is very important for entrepreneurs, particularly Small and medium sized Enterprises (SMEs) to understand the basic accounting/bookkeeping functions and information content of financial Statements for the production of vital data that enhance financial decisions. Basic business and financial data, when well analyzed, interpreted and presented by competent professionals will help the business produce Financial Metrics used to evaluate financial performance, health and stability of a business.
Accounting and Bookkeeping help to provide the following benefits and insights which lead to better decisions:
Business Performance
It reveals business performance, financial position, Cash Flows and overall profitability. It provides a basis to properly evaluate costs incurred and benefits derivable from investments and operations.
Reliable and Timely information
It enables timely and reliable information to be generated, maintained, and reported for quick decision making.
Business Assets and Resources Maintenance
Business Assets, Funds, Materials, Equipment are protected from misuse, wastage or mismanaged, thus the business is able to optimize its resources to advantage.
Ensuring Accurate Financial Records
Accurate financial records help to determine the legitimacy of financial transactions, enhance tax compliance and ability to access financial support or Loans from financial Institutions.
Planning and Control of Operations
It assist planning and control which helps organization to minimize financial or business risks and prevent organization from drowning in the face of such risk or uncertainty.
Boosting of Revenue Streams.
Various sources of revenue are identified and highlighted for monitoring and improvement.
•Nwokolo Charles is a Consultant. He helps individuals and Entrepreneurs to plan and set financial goals that fit their needs. He can be reached at cinwokolo@gmail.com, 08030599774.
