Suppose a relative leaves you a substantial sum of money and you decide to carry out your lifelong dream of opening a small sportswear shop. You rent space in a local shopping center, purchase fixtures and equipment, purchase goods to sell, hire salespeople, and open the store to customers. Before long you realize that, to run your business successfully, you need financial information about the business. You probably need information that provides answers to the following questions:

• How much cash does the business have?
• How much money do customers owe the business?
• What is the cost of the merchandise sold?
• What is the change in sales volume?
• How much money is owed to suppliers?
• What is the profit or loss?

As your business grows, you will need even more financial information to evaluate the firm’s performance and make decisions about the future. An efficient accounting system allows owners and managers to quickly obtain a wide range of useful information. The need for timely information is one reason that businesses have an accounting system directed by a professional staff.