What does 'accounting' enable an organization to do?

The concept of 'accounting' primarily focuses on the systematic recording, analyzing, and reporting of financial transactions. It enables an organization to account fully for how money is spent, providing transparency and insights into financial performance. This process includes tracking expenses, revenues, assets, and liabilities, which helps organizations make informed decisions based on their financial status.

By having detailed records of financial activities, accounting allows firms to ensure compliance with regulations, prepare for audits, and create budgets that reflect their operational needs. It plays a crucial role in evaluating the effectiveness of financial management and supports strategic planning by making it clear where resources are allocated and how funds are utilized. This clarity is essential for stakeholders to assess the organization's financial health and make informed decisions regarding investments, management practices, and overall business strategy.