Importance Of Accounting In Accounting

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Accounting and bookkeeping are intertwined and provides financial information to users so that they can make good decision. Throughout this essay we are going to see how accounting and bookkeeping play a significant role in personal finance management and how financial software are important for financial decision making.
Keywords: Accounting, bookkeeping, information, decision making, finance management.

Accounting is information sciences used to collect, classify, and manipulate financial data for organizations and individuals. Accounting shows the financial health (Liabilities), the profitability (Income statement) and the equity (owner’s equity) of an organization or an individual. Without information no good decision can be made. Accounting
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Accounting helps me to be aware of my income sources in order to know my assets; it also helps me to be more disciplined by providing a good snapshot on how and on what I expense my money so that I can acknowledge my unnecessary expenses and I how take corrective actions. Without good financial information we can more likely create improper budgets and set goals that are not SMART (specific, measurable, achievable, realistic and timely). Knowing and adhering to the accounting principles permits me to be more honest in my financial affairs. For instance, when applying for a bank loan in order to raise money to fund my project or reporting my annual income to the government for tax requirements I will not give false information to deceive the lender or the government because of my ethical attitudes and behaviors. As we have already seen the definition of accounting, Bookkeeping is the process of recording and classifying business financial transactions (activities). So, bookkeeping records the transactions during a specific period and present these financial information into a…show more content…
Balance sheet: the balance sheet provides information about the financial health of an organization or individual i.e. how much the company or the individual own and how much the company or the individual owe. So, the information on the balance sheet will enable me to accurately aware of my current financial position within a stated period of time.
Statement of cash flow: The statement of cash flow provides clear information about the liquidity of a company or an individual. So, having the statement of cash flow at my disposal I will be able to know how much cash I have at hand for my daily activities such as expenses.So, We can perfectly see that the three products of accounting and bookkeeping which are income statement, balance sheet and statement of cash flow are play a crucial role in my personal finance management

According to Vangie Beal, “financial software is computer software designed to help individuals manage their finances and other accounting needs. There are two types of financial software: money management software and tax software. Money management software is purposed

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