1.

0 INTRODUCTION
Accounting is the process of recording financial transactions pertaining to a certain
business. The accounting process involves identifying, measuring, recording, summarizing,
analyzing, and reporting financial transactions for oversight agencies, regulatory authorities, and
tax collection entities and other entities within financial business. Also Accounting as an aspect
of business management provides a clear picture of the financial health of an organization and its
performance, which can serve as a catalyst for resource management and strategic growth. 1

1.1 The Purpose of Accounting

Accounting is one of the key functions of almost any business entity. It may be handled
by a bookkeeper or an accountant at a small firm, or by sizable finance departments with dozens
of employees at larger companies. The reports generated by various streams of accounting, such
as cost accounting and managerial accounting, are invaluable in helping the management making
informed business decisions. There are various types of Accounting which encompasses
Financial Accounting, Managerial Accounting, cost accounting and tax accounting and etc. 2

2.0 THE BENEFITS OF ACCOUNTING IN THE SOCIETY

Accounting plays a significant role to the society as it aids in managing and ease the
operation of various real life tasks or activities, thus the following are the benefits of accounting
to the society;
i) Accounting helps in Budgeting and Managing Your Spending
Most individuals do not keep track of their spending, due to failure to analyze their
income and expenses within a period of time. When you overspend, you are left with a zero
or negative balance, and often you incur additional charges and loss, thus in preventing this
situation from happening, people on individual basis and even sole proprietors, corporations
and other entities use accounting knowledge to keep track of financial statement throughout
a specific period i.e. annually or on daily basis.

In this basis, these entities create a budgeting plan by looking at the income gained
and expenses and make sure that at the end of a certain period there is enough to cover

1
https://m.economictimes.com (last accessed on 27th November, 2023 at 1132 hours)
2
https://www.investopedia.com (last accessed on 27th November, 2023 at 1231 hours)

1
everything. If the numbers don’t line up—in other words, if they spend more than they make
—that’s when they budget by balancing the numbers and work to manage spending. And
this is done by cutting down expenses in some areas (such as dining out or entertainment,
loans, and other unnecessary expenditures, and at the end of the day, these entities hopefully
have something left for savings at the end of each accounting cycle or period. 3

ii) Accounting aids in providing a framework in Planning for the Future

In economically unstable times, it’s common for most people and other business
entities to think and assess about the future. The goal is usually to have enough financial
muscle so as to be able to overcome various responsibilities or duties, for instance parents
use accounting skills by evaluating their income and expenses so as to make sure at any
time, they are able to pay their child’s college tuition, have money for a vacation, a home, or
a car. For corporations, they tend to employ accounting skills in making sure that they are
able to buy new stock, control debt, advance marketing and even expand investment, thus
by planning ahead financially, the ultimate goal to have healthy financial future is in safe
hands. This is to say that every time you sit down and think about how you will have the
money to do important things, you are using accounting skills. 4

iii) It provide job opportunities to personnels who possess accounting and financial
managing knowledge5.

In today's society, the demand for good accountants exceeds extravagantly. As our society
develops, financial position of businesses and industries have become more and more complex to
monitor or control, and this control depends on a great deal of the bookkeepers and accountants
who can analyze numerical figures and advise the management on what should be done, on a
certain circumstance.

Most employers prefer employees with some knowledge of bookkeeping and accounting,
accountants have job opportunities in private businesses or corporations as internal auditors or
outside consultants or even chief financial officers of companies.. Accounting education opens

3
https://www.ecpi.edu/blog/why-is-accounting-important-in-everyday-life (last accessed on 27th November, 2023 at
2310 hours)
4
Ibid
5
Baker, M. (1994). “Handbook Of Modern Accounting Theory”;McGraw-Hill publisher

2
doors to accountants as they are able to gain income based on the professional activities they
provide, and thus being able to handle their basic needs and other luxurious needs and services,
and generally fostering economic independence within society through paying taxes, and other
charges levied by the government6.

iv) Accounting helps in evaluating progress of a business and managing resources 7

Accounting helps individuals and organizations to analyze income, expenses, as well as

net profit or loss, thus enabling them to use their resources effectively. This is by ensuring that
activities are carried out in a well-planned manner and according to the available resources such
as Labour force, and Capital.

v) Accounting aid investors and opportunists to make good investment decision within
the business arena.8

Investors and opportunists make the decision on what, when, and how to invest in a
market because of good accounting reporting which influences them to analyze and exhaust the
opportunities, risks and setbacks that are within the investment market so as to be able to
accumulate profit at a desirable rate. All of these moves, cannot be material without employing
accounting knowledge, as applying such knowledge aids them to approach a business in a
numerical perspective, thus making good decision on how they can invest maybe by increasing
their shares in the investment or decreasing. On the other hand, with accounting, the people
within the society can also evaluate loss incurred and the profit accumulated from the investment
and also business and dictate their next move financially.

vi) Accounting aids in supplying numeral data to various institutions regarding its
financial management and administration9

6
Saylor Academy (The Role of Accounting in Society)
7
https://work.chron.com (last accessed on 27th November, 2023 at 1309 hours)
8
https://www.morisonglobal.com (last accessed on 27th November, 2023 at 1336 hours)
9
Prof R. Mishra, & Prof N. Goda. et al. (2015), Book Keeping and Accounting, Mumbai, Himalaya Publishing
House.

3
 Accounting helps in providing numerical data or information that aids in overseeing and
controlling various aspects of the organizational and institutional operations such as schools,
universities, hospitals, NGOs’, business firm and government regulatory authorities and agencies.

This information is critical for effective decision-making, planning, and controlling activities
within the institution, for example under Decision-Making, numerical data derived from
accounting, such as financial statements (balance sheet, income statement, cash flow statement),
helps management make informed decisions in taxation, income generation, and cost
management and control, which are crucial for strategic planning and decision-making within
their business structure or plan10.

vii) Accounting plays a great deal in resolving and facilitate a clear understanding of
various complex financial concepts and principles that emerge within the society11

Accounting does not only provide a coverage for understanding the numerical aspect of
finance or business, but also facilitate a clear understanding of various financial concepts that are
somehow hard to grasp by most indigenous people as it requires advanced knowledge on
analyzing and exploiting numerical data, for instance these concepts or principles within the
financial discipline includes inflation, the chain of demand and supply, stock and foreign
exchange, liquidation, the rise and fall of market, per capita income, Gross National Income,
bank statements and even government budget for every financial year.

3.0 CONCLUSION
In conclusion, accounting is not only pivotal for businesses but also for individuals and
society as a whole, since it helps providing valuable information for decision-making, resource
management, and economic development. So without the existence and application of
accounting knowledge it would be very difficult to understand the financial position and
development of people, in individual basis, and other business entities such as sole proprietors,
partnership, and even corporations.
BIBLIOGRAPHY
BOOKS

10
Abbott, L. (2012).”Economic and the Morden world”; Literary Licensing, LLC Publisher
11
Ibid

4
Prof R. Mishra, & Prof N. Goda, et al. (2015). Book keeping and Accounting, Mumbai, Himalaya
Publishing House.
Baker, M. (1994). “Handbook Of Modern Accounting Theory”;Mcgraw-Hill Publisher.
Abbott, L. (2012). “Economic and the Morden world”;Literary Licensing, LLC Publisher.
Saylor Academy (The Role of Accounting in Society).
H. Thomas Johnson (Profit Beyond Measure).

WEBSITES
https://www.consumerfinance.gov
https://www.indeed.com
https://work.chron.com
https://m.economictimes.com
www.investopedia.com
https://www.ecpi.edu/blog/why-is-accounting-important-in-everyday-life
https://homework.study.com
https://www.morisonglobal.com