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Business Finance
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Business accounting is the systematic recording, analysing, interpreting and presenting of financial information. Accounting may be done by one person in a small business, or by different teams in large organisations. Accounting is the way a business keeps track of its operations. This information is organised into reports that show the financial health of a business. This financial reporting is the process to track, analyse and report your business’ income. The purpose of these reports is to examine resource usage, cash flow, business performance and the financial health of the business.
Business and Financial Accounting has various aims:
- Provide information to investors – Investors will want to know how cash is being reinvested in the business, and how efficiently capital is being used. Financial reporting helps investors decide whether your business is a good place for their cash.
- Track cash flow – Where is your business’ money coming from? Where is it going? Is the business making a profit or a loss? These answers are important to know – they show how well your business is performing, and whether it can cover its debts and continue to grow. It provides the information that owners/shareholders use to make better decisions about the business.
- Analyse assets, liabilities and owner's equity – By monitoring these, and any changes to them, you can work out what to expect in the future, and what you can change now to prepare. This also shows the availability of resources for future growth.
- Lastly, financial and business reporting helps business owners meet their compliance obligations.
For a company to be successful, every employee must understand what makes money for the company. When employees are not trained in financial acuity, poor business decisions are made. Financial acumen is a skill that can be learned and provides integrity in the numbers because everyone is using the same measuring stick. Finance is the language of the business, and it enables people to communicate how they will make money for their business.