Growing and making profit

Abigail T. Sarmiento he most important part of any successful business is accounting, which records all profits, losses, credits, and debts.

Accounting also tells you the state of the business in numbers, not words. It provides the most vital information needed to understand how a business grows, makes money, where the profit of a business goes, and what the cash flow is.

In short, one must understand the basic principles of accounting to run a business, and to be able to help a business grow and make profit.

Day by day, labor-driven jobs are replaced by better-paying, general management jobs. So, if one wishes to work for a company and is currently managing any aspect of the company – or aspire to move up to management – then he or she must need to understand what accounting is.

Even an entrepreneur, or those planning to start their own business, needs to understand, at the very least, the basic principles of accounting.

Sadly, there are people in high-ranking positions that have no concept of basic accounting and are thus withdrawn and quiet. Yet, these are the people who somehow increase sales and overall profit of a company.

Like any new skill, knowledge in accounting must be acquired. There is a learning curve, and the skill needs to be practiced, or used in this case, in order for it to be effective.

Those born as right-brain thinkers tend to be better at creative, imaginative, passionate activities. Those who are left-brain thinkers, on the other hand, are naturally adept at working with numbers, applying logical reasoning, and analytically solving problems.

Regardless, anyone can learn the basic principles of accounting and develop a knack for managing the financial aspects of a business. The upside of learning basic accounting principles is that the same fundamental rules apply when working with the bottom line.

According to the Insurance Information Institute website, "Accounting is a system of recording, analyzing and verifying an organization's financial hist or y."

It has also been referred to as the "language of business," and formally defined as the practice of objectively measuring and reporting on a summary of an individual or business's financial transactions.

In a more simplified description, accounting is the process of producing timely, accurate, and understandable information about a company's financial st at u s.

T****** The author is Administrative Aide VI of DepEd Division of Mabalacat, Pampanga.