The need of an accounting department for any organization is vital. There is no business in this world that has no accounting records. Even a non profit making organization will have records of their cash inflows and out flows as they too receive money in the form of donations and spend them whenever they are involved in service activities. Therefore, due to various reasons, the presence of such a department has been proven greatly important in the eyes of man. Here are some such instances as to why we consider that these departments are important.
Debtors and creditors
Every organization will have its fair share of debtors and creditors. Just as you will find no business without accountants or an accounting department, nor can you find one without accounts payable and receivable. Therefore, in order to manage these and sure that your debtors will pay you back, the financial records are important. Similarly, you too need to take it up as a responsibility to pay back to your creditors. In order to keep of track of this, these records are mandatory as they will not only be a reminder but also a form of written proof for it.
Making the payroll of the organization is a monthly task and requires the assistance of the professionals department. You need not contact external accounting services to calculate the numbers if your organization has the necessary number of employees to perform this. These payrolls will include the overtime, special benefits and the basic salaries of all employees including those of the minor staff and will require to be accurate as they determine the salary of each person in the company.
You need to be aware of the fixed assets of the company as well as the liquid ones. Therefore, you need to conduct necessary accounting calculations in order to determine the position of the organization. This why, at the end of each month, a company prepares a statement of financial position in accordance with the accounting standards of the country; this will give the external stakeholders and overall idea on the actual position of the business.
The company will own inventory. Simply said, inventory is the goods owned by an organization with the purpose of resale. In order to be smooth in the process of resale, the company needs to be aware of how much inventory is in possession of the company and the accounting department is what will release statements regarding that.
Therefore, it can be clearly stated that an accounting department plays a crucial role in an organization.