Question

Why are accounting and finance important functions in all business?

Answer 1

In order to develop a business, innovative ideas are required. But in order to know whether our objectives are achieved or not, we need facts and evidences of results. Accounting helps in keeping a record of transactions and helps us to know whether we have achieved the expected objectives. If the objectives are not achieved, we need to think about alternative course of action to achieve the same. Accounting provides the information related to the business to all the stakeholders of the business. Stakeholders include employees, management, government, shareholders, potential investors etc.

Finance is the important part in business without which a business can't work. It is difficult to finance the business with owned funds. We require alternative financing methods. Financing also involves the decisions of choosing one project in mutually exclusive projects. Capital Budgeting is crucial to any business to excel because we don't want to waste our financial resources in a project which is not feasible and profitable.

These are the some ways in which accounting and finance are important functions. Still there are many more benefits which are derived by the business with the help of accounting and finance.