Importance of Accounting in Business

Here in the Philippines, accounting is often seen by many people as book keeping and just essential for meeting tax requirements.  This is how I see it. 

Truthful Information

ꜜ

Input  à Process à Output

                                ꜜ            ꜜ

                                                 Transactions                     Financial Statements:

                                             Input = Output                    1. Balance Sheet

                                 Asset = Liabilities + Capital            2. Income Statement

                                          Debit = Credit                       3. Statement of Owner’s Equity

                                                                                      4. Statement of Cash Flow

            ꜜ

                                                                                     Increase in Wealth = Income

Balance Sheet (Statement of Financial Condition)
Investing (Assets) Returns Also called resources in economics	Financing (Liabilities and Owner’s Equity) Considers risk in debt to capital ratio

Income Statement (Operating)

Production à Distribution à Collection

Business Cycle

Finance à Invest à Operating  ç

Petty Cash – Checking of receipts and other documents with signatures