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Accounting is important for business because the numbers tell a story that helps you understand what is going on in your company financially. Enforcement of GAAP. Accounting Principles are the rules and guidelines followed by the different entities to record, to prepare and to present the financial statements of the company for presenting true and fair picture of those financial statements. The term accounting is very common, especially during tax season. ... report a more significant amount or two, report a lesser amount. There are many types, from accounting for small businesses, government, forensic, and […] But before we dive into the importance of accounting in business, let’s cover the basics – what is accounting? Prior to the creation of IFRS, most countries had their own form of generally accepted accounting principles (GAAP). Accounting is the way we set up the system, the principles behind it, and the ways we check the system to make sure that it is working properly. It is important to understand that sound organizational decisions are often (and should be) based on both financial and nonfinancial information. Accounting refers to the systematic and detailed recording of financial transactions of a business. Without uniformity of accounting principles, investors are unable to interpret an international company’s accounting information. Importance of Accounting Principles Generally accepted accounting principles are more than just a set of rules on paper. Accounting also gives your business the numbers and information you need to pay your taxes, report your earnings to … In practice, they serve a very important function. If your company is involved in any international business, it’s important to understand the differences between GAAP and IFRS. Learn why an investor should understand business accounting to perform investment and credit analysis. 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