Question

Question 5:

(A)Mr. Amir planning to start his own business, his suggested him to know some of the basic knowledge about like accounting ,economics, finance, marketing etc.. One of the aspects is accounting. Why business men have to know about Accounting? Justify your answer.

(5 Marks, Word Limit 200-300)

(B) Ms.Iman joins an Information technology firm as a system analyst. She has to work in very close coordination with all the departmental heads in the firm, Ms.Iman realizes that each department head has own style of working. They tend to deal with a given situation, an issue or a problem through a combination of their own experience, creativity, imagination, initiative and innovation. From the above scenario: Identify and explain the nature of management highlighted.

(5 Marks, Word Limit 200-300)

please focuse in limit of words ?

Answer 1

Since, multiple questions have been posted, I have answered the first one.

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A):

A business is operated and managed by any company to earn profits. With the help of accounting, the day to day business transactions are recorded in the financial statements of the company (such as income statement, balance sheet and cash flow statement). Accounting is essential to keep a track of company's revenues, expenditures, gains, losses, assets and liabilities.

Knowledge of accounting is important for a businessman to ensure:

a) that the transactions are recorded in the books of accounts in a timely manner (that is, as and when they occur),

b) that the relevant accounting principles, procedures and standards have been followed in preparation of financial statements,

c) that the accounting data is relevant and of use to various internal stakeholders (such as management and employees) and external stakeholders (such as lenders, investors, creditors and government authorities). For Instance, accounting provides the information that is required by tax authorities to determine the tax liability of the company.

Without accounting, it is practically impossible for a businessman to measure, evaluate and compare the performance of its company with other players in the industry. Accounting serves as the basis for preparing budgets, making financial projections for the future and identifying deviations from expected financial performance. Important business decisions such as expansion into new markets, introduction of new products, exit from non-profitable markets and discontinuance of non-performing products are made with the use of accounting.