What Is The Importance Of Accounting To Profit And Non Profit Making Organizations?

Accounting keeps record for each and every cash related transaction of the companies. It is good to carry accounting records not only for listed but also for non-listed companies. For profit organizations, it is very important for them to know how much revenues have been recorded over the periods and how much money has been gone out as expenses so that they can work on cost reduction and maximize profits. Accounting enables the organizations to keep track of cash flows, assets, liabilities which give a reality check to the businesses so that they can make their financial system more efficient. Same reasons apply for non-profit organizations because although their aim is not to earn profits for themselves but they still need cash for carrying out welfare activities. Accounting records give alarming signals in the form of disturbed or irregular cash movements if the management is not utilizing the financial resources in its best manner. Therefore it is highly recommended to maintain accounting records for both profit and non-profit organizations.