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"I am a high school student living in Indonesia. I have studied accounting for three years, however I still do not know what the purpose of accounting is. Can you please give me an insight about it? What are the purposes of Accounting?" The purposes of accounting are to collect, analyze, and summarize information about your company’s financial transactions or activities for use in decision-making. It helps answer questions like "How much money did you make last year?", "What's your profit margin?", "Did you incur any debt?", etc. Financial statements are the primary tools used by accountants to communicate these answers, while keeping an eye on improving efficiency and mitigating risk. The process of accounting is very important for businesses to maintain the integrity of their financial records. Since accounting is tied to many other areas of an organization, it can be argued that accounting is one of the most important functions in any business. Accounting information is used in making business decisions. It allows an organization to provide significant information about its financial affairs to users, both inside and outside the company, who may not have access to the detailed records that are actually kept by accounting staff. Accounting can also be seen as a control system for an organization. An accounting system is vital to any business because it records and analyzes transactions. An accounting system provides information to users for decision making. Accounting is the process of recording, classifying, and summarizing economic events for the purpose of providing information. Accounting can be used to provide information about these events to an organization's managers, investors, creditors, tax authorities, legal counsel, etc. Accounting helps us to investigate into how organizations are formed and run in terms of their structure. It also analyses how organizations are financed with investments from both internal sources (shareholders' funds) and external sources (bank loans). The result of this analysis allows us to make generalizations about the activities of businesses at a particular moment in time. This gives us an insight into how an organization is designed, how the structure of the organization is developed, and how it operates. Accounting can help in looking at what strategies are being used in order to maximize the goals that have been established by the organization. A business that has a clear definition of its goals needs to have a system to measure how well it is doing in regards to these goals. If there are no specific goals set for an organization, there will be no way for accounting to determine if they are being met or not. As well as measuring performance, accountants also use information gathered from accounting records when making recommendations on future actions. Accounting helps minimise the amount of risks taken by an organization by providing a clearer picture of the company's financial condition. This involves the risk of possible losses and also possible limitations of future growth and development. An organization can make use of this information to better predict the consequences of taking on different types of projects, investments, and liabilities. Accounting provides an objective method for measuring productivity. A business must determine how productive it is performing in order to set goals and to then measure their performance against these goals as well as against industry standards. cfa1e77820
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