What if we woke up tomorrow morning to find the bookkeeping records of all businesses worldwide destroyed during the night?

                  WHAT'S THE PURPOSE OF ACCOUNTING?

Imagine a telephone company with no system in place to document who calls whom and how long they talk. Or a manager of a 300-unit apartment complex who has forgotten to write down which tenants have and have not paid this month s rent. Or an accounting professor who, the day before final grades are due, loses the only copy of the disk containing the spreadsheet of all the homework, quiz, and exam scores. Each of these scenarios illustrates a problem with bookkeeping, the least glamorous aspect of accounting. Bookkeeping is the preservation of a systematic, quantitative record of an activity. Bookkeeping systems can be very primitive cutting notches in a stick to tally how many sheep you have or moving beads on a string to track the score in a billiards game. But the importance of routine bookkeeping cannot be overstated; without bookkeeping, business is impossible.

To evaluate the importance of bookkeeping records, we ll use a thought experiment. Suppose that sometime during the night, every copy of every novel ever written were to disappear.
Could life proceed normally the next day? While the cultural loss would be incalculable, the normal activities of the next day would not be noticeably affected. What if television were suddenly gone when we woke up? While we might wander around wondering what to do with our time, life would go on. But what if we woke up tomorrow morning to find the bookkeeping records of all businesses worldwide destroyed during the night? Businesses that rely on up-to the-minute customer account information, such as banks, simply could not open their doors.
Retailers would have to insist on cash purchases, since no credit records could be verified. Manufacturers would have to do a quick count of existing inventories of raw materials and components to find out whether they could keep their production lines running. Suppliers would have to call all their customers, if they could remember who they were, to renegotiate purchase orders.
Attorneys would find themselves in endless arguments about their fees  because they would have no record of billable hours. Routine and dry as bookkeeping may seem, the world simply could not function for one day without it.

More Important Notes coming soon..

 

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