Accounting is necessary to make payments.The basis for valuing a company is to use its accounting records. Instead of simply closing a business, a business owner may attempt to "cash-out" of their position and receive compensation for building a company. Small companies that may be looking to be acquired often need to present financial statements as part of acquisition or merger efforts. Accounting is necessary for owner exit.Banks and other lending institutions will often require financial statements in compliance with accounting rules as part of the underwriting and review process for issuing a loan. The same rules pertain to debt financing. Prior to private funding, investors will usually require financial statements (often audited) to gauge the overall health of a company. External investors want confidence that they know what they are investing in. Without accounting, a company wouldn't be able to tell which products are its best sellers, how much profit is made in each department, and what overhead costs are holding back profits. Without insight into how a business is performing, it is impossible for a company to make smart financial decisions through forecasting. Accounting is necessary for company growth.
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