Accounting refers to keeping all the records of transactions made by a business in a systematic and detailed way. It allows you to have a clear look at the expenses and the income that your company has and will enable you to make the necessary changes. This can be a very tedious job, especially if you own a large company and the best and the most common practice is to hire an accounting services provider Singapore.
The three critical statements involved in the accounting process
- Income statement: This is a detailed report of your company’s profit and loss. This statement allows you to check the company’s profitability and gives a clear description of the company’s income and any gain or loss suffered.
- Balance sheet: This sheet allows you to know the good financial status of the company. It highlights the gains and the losses and the income and expenses and will enable you to have a clear idea about the operations taking place in the company.
- Cash flow statement: This statement acts as a bridge between the income statement and the balance sheet and highlights the cash inflow and outflow during a given period.
Why is accounting important?
Taking the help of an accounting services provider singapore is necessary for businesses and companies in the following ways.
Evaluation of the company’s profits and losses these financial records allow you to have clear insights into the company’s operation. It highlights where and what the money is spent, how much is earned, and whether the company is soaring or sinking. It is a great way to decide where the funds need to be invested, as the previous records can be compared and the best use of money can be calculated.
- Abiding by the law
The law requires the law to maintain proper financial records and have suitable bookkeeping measures. This allows you to take care of the taxes and pension funds. Also, these records can be asked by the monetary department at any time, and if failed to present a proper form, you can be fined a considerable penalty.
- Allows the company to expand
Having proper records and statements of the finances allows you to look into unnecessary investments and stop them. You can also look at your overall growth and plan for future projects that will require monetary help.
- Financial statements
Having proper bookkeeping since the beginning allows you to have accurate financial statements that need to be filed for various purposes, such as a stock exchange. They are also required for tax filing. These filed statements also give any potential investors the base to decide.
Hence, bookkeeping and accounting are crucial for all businesses.