DOI: https://doi.org/10.36719/2706-6185/53/156-159
Ikhtiyar Agazade
Azerbaijan State Agrarian University
Master's student
https://orcid.org/0009-0000-8136-9472
i.agazada@yahoo.com
The Importance of Accounting for Profits and Losses
Abstract
In the modern business environment, the accurate and transparent determination of a company's financial results is one of the key indicators of effective economic activity. In this regard, profit and loss accounting plays a crucial role in the strategic management process of enterprises. This type of accounting ensures the systematic recording of revenues and expenses, the analysis of financial outcomes, and the identification of future operational directions. Through profit and loss accounting, companies can assess their financial stability, determine the efficiency of resource utilization, and optimize decision-making processes.
Profit and loss accounting also contributes to the analysis of profitability indicators in business entities, the minimization of financial risks, and the proper management of cash flows. With the help of this accounting system, enterprises evaluate investment opportunities, improve operational strategies, and enhance their competitiveness in the market. Furthermore, the preparation and properanalysis of profit and loss statements enable compliance with reporting requirements to government authorities, the accurate fulfillment of tax obligations, and the enhancement of financial transparency.
Thus, the importance of profit and loss accounting goes beyond internal financial management and has a significant impact on the overall stability and development of the economic system. A well-organized accounting system enables enterprises to operate efficiently, identify risks in a timely manner, and achieve sustainable financial performance.
Keywords: profit, loss, financial accounting, profitability, financial statements, risk management, transparency