Essay by naughtygal November 2004

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Why Is It Necessary To Keep Accurate Financial Records?

In order to make judgements about business activities, individuals require accounting information from an accounting system by processing business data so that those parties either interested in or affected by the business can be provided with the means to find out how well or badly the organisation is performing.

There are a number of reasons as to why businesses keep accurate financial records. One of which is, to monitor the success of the business and decision making purposes. This is important, as accounting information is useful for those who need to make decisions within the business.

Another reason as to why it is necessary to keep accurate financial records is, to maintain good relations with customers, accurate records will reduce the risk losing customers. Many businesses put their customers first in everything they do and are always striving to offer their customers an excellent service, keeping accurate financial records enables the organisation to see that all goods purchased by the customer are delivered to them on time and in good condition, they are then able to see if their existing customers come back to use their services.

Accurate financial records are also necessary to ensure that the correct amount of tax are paid, keeping accurate financial records will enable the business to see exactly how much tax they are paying, if they are not paying the right amount they will be able to deal with the problem as soon as possible.

Additionally, accurate records are kept to be able to negotiate with suppliers, keeping accurate financial records will allow the business to negotiate with suppliers, accurate records will enable the supplier to see if the customers business is financially secure and that it generates sufficient cash flow to pay its...