Question

"Without the contribution of corporate accounting, small businesses cannot become large companies and large companies cannot maintain their size."

Your task:
Discuss the above expression with your own sentences. Comment on whether you are in favor or against and argue your opinions / theses. Opinions / theses without arguments are not to be considered (maximum 100 words).

Answer 1

I am in favor of

"Without the contribution of corporate accounting, small businesses cannot become large companies and large companies cannot maintain their size."

Accounting is important for small business owners as it helps the owners, managers, investors and other stakeholders in the business evaluate the financial performance of the business. Accounting provides vital information regarding cost and earnings, profit and loss, liabilities and assets for decision making, planning and controlling processes within a business.

The main objective of accounting is to record financial transactions in the books of accounts to identify, measure and communicate economic information. Moreover, tax reporting agencies require you to keep books at a minimum level that tracks income and expenditure

Poor financial management is one of the primary reasons for small business failure especially in the first year of the business. Since small businesses have a limited budget and other resources, accounting plays a crucial role in providing information that helps businesses in its growth and development.

For small business owners, accounting is crucial due to the reasons below:

• Keep a track of the cash flow. To prevent your business cash flow from running dry, you should implement policies for efficient record-keeping and a sound financial strategy.
• To understand the concepts of fixed costs, variable costs and how to accurately cost your project, small business owners can rely on cost accounting. This way you don’t end up losing money on a project you thought would be a big earner
• Accounting gives you a better grasp of the well-being of the business. You can do this by learning to read a balance sheet, income statement, and cash flow statement
• Helps you detect and avoid frauds and theft by customers, employees and suppliers
• When you understand the business finance and dealings, you are better equipped with facing audits
• Bankers are more confident when dealing with business owners who have a handle on the business finances and actually understand financial implications

Importance-

Accounting necessitates huge amounts of data collection and organization of information in a way that can easily be interpreted by the management. Business owners need to keep tabs on the operating costs, changing revenues and dividends to make strategic decisions.

Key reasons to invest in an accountant for your small business:

• Analyze the financial data and determine areas for improvement. This is crucial for the long-term health of the business
• Prepare financial statements based on the Generally Accepted Accounting Principles (GAAP)
• You will get customized advice based on your unique business needs
• Using a third-party accountant ensures that you’ll receive unbiased information that is verifiable and objective
• The accountant acts as a financial advisor and helps you with budgeting and monitoring cash flow on a steady basis. This will allow you to navigate any hurdles that occur in real time