Your line manager has asked you what you think the accounting department’s role is in relation to the organisation.
(P1) What is the main purpose of accounting within a business?
In a very general way we can say that accounting is the language of business.
The main purpose is to keep a record, a very organized record of “the numbers” (every financial action), such as: assets, liabilities, flow of the money in and out of the business.
This information (financial) is usually saved and kept in the company through, for example:
Balance sheets (A financial statement that shows a company's assets, liabilities at a specific point in time.)
Cash flow forecast (Estimate of the timing and amounts of cash inflows and outflows over a specific period [usually 12 months]).
They keep these records as it will be extremely helpful for everyone in the business, providing information in order to have good and safe decision making. For example, if the company is thinking about expanding, they will use the records to understand weather or not they should do it. If the numbers are not promising for various reasons (more outflows then inflows, poor income, large investments) they will not proceed with the idea. On the other hand, if they do have a stable financial situation they can go for it and expand the business. All thanks to the records keep of financial transactions.
Another reason is to provide a structure to business activity