Bookkeeping And Businesses}

Bookkeeping and Businesses

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vks

In today’s business world, every activity is done with some motive or purpose. In most cases, the purpose would be to earn profit while in some other cases the purpose might be social welfare or social responsibility; namely, providing free education, healthcare, and the like. Whatever could be the purpose, the activity is most likely carried out as an organized affair. Every organization will have to make use of resources such as material, qualified labour, customer services, capital and the required information or knowledge, to work effectively as a group of people in the organization. Money must be spent with thrift and care. If a person decides to spend money carelessly, a day is bound to come when he would be left with no money. The same can be said about running a business also. A business organization would be receiving money from various sources such as sale of products or goods, sale of private assets, receipt from various income sources like rent, interests, commission, etc. A business organization has to spend money on different items like capital expenses, purchases and salary.

Businesses should manage their business affairs in such a way that they receive more than they spend. Otherwise, they might land up in trouble because they will have to meet the expenses from the original capital amount invested when they had started the business. This way, the capital of the business will get reduced in no time due to this. If this state of affairs is allowed to continue for a long period of time, then the possibility is that the whole capital of the business will get frittered or washed away. But, if the business person manages his affairs in a very efficient way, and if the receipts are found to be more than the payments every year, the business will prosper and grow in size.

It has to be kept in mind that profit and loss are the result or outcome of the money involved in the cost of goods sold and their sales. In actual practice, if an organization or business needs to be run at a profit then it will have to sell its goods at such a price that it enables it to bear expenses on account of the cost of goods manufactured as well as other expenses such as rent, salary, interest payments, insurance etc. Thus for making profits, either the sales should be kept adequately high or the expenses should be kept as low as possible so that they fully make up for the losses. Besides that, there are some immovable assets as well, namely, furniture, the building, machinery, other equipment etc. Similarly, a business organization may have to borrow money in times of need. In an effort to keep the property in good condition, to pay back the debts well within the time frame agreed, to keep down the various expenses, and to increase sales revenue, it is necessary that the business owner keeps a constant watch on the various aspects of bookkeeping as well.

The author is an SEO copy writer and internet marketing specialist. To know more about

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Bookkeeping and Businesses }