Importance of Keeping Accounting Records

Generally, there are various advantages which arises out of keeping accounting records, some of the advantages are of the following. These are;

It helps in measuring performance;

Accounting record keeping aids a business owner to determine how far the business has gone since its commencement. That is, it helps the owner to know whether the business is growing or not. The performance of a business is usually determined through the calculation of the profit. For example a business with an increase in its annual profit will be deemed to be growing and vice-versa.

It aids business planning;

It is a truism that knowing where you are is a prerequisite to knowing where you want to be. If a business present position is not known, then to plan for the business will be a fairy tale. Therefore, keeping of the financial activities of the business in place helps in planning for the future growth of the business.

It helps business owners to have control over their businesses;

Control is the ability or the authority to manage things. But having control over a business means having control mostly over the financial affairs of the business. But if accounting records are not kept and maintained by a business owner, how can he/she confidently have full and adequate control over the financial affairs of the business which can spell doom for the business.

It aids decision-making;

This mean, it helps a business owner to make quality decision that will bring about improvement in his / her business. The major aim of keeping accounting records is to ensure that accurate information are available to facilitate informed judgements in respect of the activities of the business.