I believe that understanding some basic accounting principles is a must for a future entrepreneur. The reading included basic information about General Ledger, Journal Entries, Cash Receipts and Disbursements cycle, payroll, bank reconciliation, investments, and other topics. However, I would like to give an example showing understanding of accounting is significant.
I’m taking an Auditing class, and we had a lecture on Fraud. A family friend was an accountant at a small family business for a long time. She used about $500,000 of business money on her personal needs. It was going for some time, but one day she booked her vacation on a business credit card and it showed up on the statement. Business owners would never think she could do something like. They were not interested in looking over accounting documents, and never checked/reconciled the cash balance. There are millions examples like this one. Entrepreneurs should have basic idea of accounting principles and should show interest to finance activities within the company.
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