The Importance of Accounting Knowledge in Business

Why is accounting knowledge important?

     In general, the notion of accounting is a process of recording, summarizing, classifying, processing, and presenting transaction data, as well as various activities related to finance, so that the information can be used by someone who is an expert in the field and becomes material for making a decision. The definition of accounting according to Suparwoto L (1990: 2) states that accounting as a system or technique for measuring and managing financial transactions and providing management results in the form of information to internal and external parties of the company.

     Knowledge is facts, truths or information obtained through experience or learning called posteriori, or through introspection called priori. Knowledge can also be defined as a combination of data and information. Data is raw facts, while information is data seen from a certain point of view. So accounting knowledge is related to understanding the calculation system in financial management.

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     An entrepreneur should have a good understanding of accounting or financial management. Entrepreneurs must understand the recording of transactions and financial reporting in a systematic and orderly manner because it is impossible to remember all transactions that occur in business activities. By understanding this, an entrepreneur can monitor whether the business is running well or not.

     Accounting is important in business, therefore accounting is also referred to as the language of business because it is a tool to convey financial information to internal and external parties. The function of accounting in business is as a tool to find out the amount of profit or loss in a certain period because it does not always make a profit. As company operational information and financial information in business. Accounting as regulation, supervision, and control in all business activities for profit.

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     In accounting knowledge there is an accounting cycle which is a systematic and gradual accounting process carried out with the aim of processing various evidences of financial transactions and processing them into a report or accounting information on an entity within a certain period. A financial report is a report that shows the financial condition and results of an entity's business activities at a certain period of time.

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     Thus accounting knowledge is very important in helping the business run. An entrepreneur can allocate the best possible so that there is no shortage or waste including labor capital, buildings, equipment and machines that can hamper business processes. The bottom line is that accounting is important to see profits with certainty, easier cost control, monitoring of assets, and good financial predictions in business.