What makes accounting so important? This may seem like an extremely redundant question, especially to those who actually work in the accounting field. The fact of the matter is that any business, big or small, cannot hope to achieve any level of success unless its figures are correct and properly stored. Even for a one-man startup, the owner has to take note of his or her credits and debits to make sure the company isn’t spending more than it’s bringing in, which could easily lead to bankruptcy.
It might benefit accounting professionals to broaden their horizons and realize that their job is actually even more important than they might think. By taking a step back, bookkeepers can put everything into perspective and recognize that they’re not only helping a business, they’re also benefiting the economy as a whole.
The bigger picture
So, thinking along these lines, it’s easy to see the effect accounting – or the lack thereof – would have on businesses across the board. Sure, a smattering of companies might be able to get along without bookkeeping for a while, but without formal plans and reliable strategies, any business is liable to crash and burn.
In general, though, accounting has a massive effect on the economy. If numerous companies were to avoid their books and subsequently fail, that would create a vacuum in the fiscal landscape in the United States. Think of it this way – consumers wouldn’t spend as much if businesses were failing left and right, which would then adversely affect everything from the banking sector to the ability of new startups to break into the market.
“Over and over again, good accounting practices have produced the levels of trust necessary to fund stable governments and vital capitalist societies, and poor accounting and its attendant lack of accountability have led to financial chaos,” Jacob Soll recently wrote in his book “The Reckoning: Financial Accountability and the Rise and Fall of Nations,” Bloomberg reported.
Some of the most important figures in history
It’s easy to see why accountants themselves think the sector is important – but they’re not being self-serving. In an interview with Soll, the news source revealed that some of the most notable figures in world history had their roots in bookkeeping. For instance, the author explained that Cosimo de Medici, head of the famous Italian dynasty, started off as an accountant.
Moreover, he noted that the fall of the Medici Family occurred when bad accounting practices started being used, which Soll said is what caused the bankruptcies of France and Spain, both of which led to revolutions.