The cash account is so important to Stan’s business because it allow him to monitor the overall income and expenditure generated by his business. He needs to know how much he is making and also how much he is spending so that he can adjust his budget if needs be.
Why do you think that most owners of the larger shops use accountants to do their books instead of doing them themselves?
The owners of most larger shops use accountants to do their books because they have to handle a large volume of accounts. They have a lot of employees they have to pay, also they pay for promotion, raw materials, rent, utilities and so on. Having an accountant do the job makes it a lot easier,. This is necessary for the overall growth of the business.
Is the difference between debits and credits important to Subway restaurant owners who don’t do their own books?
Debits and Credits are two important concepts in accounting but they differ. Credit means the amount of money added to the coffers of the accounts, this can also mean the amount of money received. Debits on the other hand mean the amount of money that was deducted from the accounts, this can also mean the amount of money spent. The difference between debits and credits is so important don’t do their books because they need to know if the account is balance or not. An unbalanced account means that there is a discrepancy in the credit and debit of the account.