There are three reasons why we have to do accounting

Essay by gradeastudent June 2006

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The first reason is that we need to record business transactions. In fact, VAT invoice and documents are legal documents and they are used to report tax or to control payment. Doing accounting requires an accountant to be good at using computer as he has to put in accounting data with an accounting program and use some accounting functions. All of figures and numbers should be correctly journalized in accounts which are used to make monthly balance sheet.

To make decisions is the most important reason. The first reason is made by the board of management who need to decide budget and adjust payment. The second decision is made by investors who want to buy shares or invest their money in any project of a corporation. With accounting information, a company can do some business forecasting so that they can have useful, right and punctual information to make further business decisions.

And finally, to do accounting is for making tax settlement. A company has to submit a monthly report on tax to a tax department and prepare for making tax payment. They are liable for paying income tax and certain taxes regulated by the government. They have to get in touch regularly with the local tax department to get mutual agreement on computing tax, making tax settlement and recording business transactions.