Accounting is a term that one hears extremely commonly in the domain of business, especially during the tax season. Providing an overview of this aspect, Scott Tominaga mentions that accounting basically just refers to the systematic and detailed recording of the diverse financial transactions of any company. Accounting plays a crucial role in the operations of a business as it helps in keeping a proper track of their track income and expenditures, while also ensuring the needed statutory compliance. Proper accounting also helps to provide the investors, the company management, as well as the government with quantitative financial information. This information can further be used in making business decisions.

For the gradual growth and development of any corporate business, it is important to maintain a detailed account of the relevant organization. Accounting is largely based on certain accepted principles, as well as a popular scientific way of presenting business transactions in the books of accounts. Scott Tominaga mentions that there are multiple factors that make accounting an indispensable element of any business organization. It tends to provide accurate information about the profit and loss of a firm, while also giving a clear picture of the financial position of the enterprise on a certain date.

Here are some of the major factors that mark the need for accounting in a business:

• Aids in evaluating the financial performance of a company: The financial records of a firm basically reflect the results of its operations, as well as its overall financial standing. It helps the management of the company to understand what is going on in which the business when it comes to its finances. Proper accounting is needed to help companies keep a track of their possible dept, gross margin, and expenses, while also enabling them to compare their current data with the accounting records of the previous year, so as to allocate budget appropriately.
• Ensures Statutory Compliance: When it comes to businesses, the corporate laws and regulations often vary from state to state. However, no matter the region, proper accounting systems and processes can go a long way in making sure of the statutory compliance when it comes to a business. It is the job of the accounting professionals of a firm to make sure that the liabilities like income tax, VAT, sales tax and pension funds are addressed appropriately.
• Creating a budget and future projections: Future projects and budgeting are two elements that can both make or break a business, and the financial records of a firm have a major role to play in it. Scott Tominaga highlights the fact that business projections and trends are largely based on historical financial data which assist in keeping the operations of a firm profitable. To be accurate, this financial data should be provided by an accounting process that is well-structured and clearly defined.

Arguably, the most important aspect of accounting is the extreme importance it has when it comes to tax filing.