Question

why is accounting important to a company like Uber? How does accurate financial reporting contribute to sound decision making?

Answer 1

Answer

Accounting is the basic necessity for any type of company to thrive and grow in the business world . For a company like Uber which is a smartphone app which provides on-demand service to users and  connects willing passengers to taxi cab drivers. Taxi drivers use their own cars when providing taxi service and Uber gets 20% of the fare , accounting is a must as To run a business , data, records, reports, analysis, accurate information about assets, debts, liabilities, profits is needed  and that is why Accounting is Importance for any business activities.

There is need of reliable in formation to be maintained of each and every customer , mode of payment , amount of fare calculated and charged , revenue from operations and such other data .

accounting helps such mobile apps to

• Calculate the appropriate amount of fare for each customer and also record the amount received from each customer thus enabling maintenance of easy valuation of cash and equivalents
• Record the amount to be paid to the actual taxi driver thus determining the payables
• Record the amount to be collected from taxi drivers thus determining the receivables as some customers pay through cash and thus the money is with the taxi driver
• Determine the flaws in the internal system in case of deviation from pre estimated standards

Accurate financial reporting contribute to sound decision making as managers depend on financial reporting for decision making and thus the more accurate is the financial reporting the more sound will be the decision making

By providing a steady and up-to-date financial reporting, a business is able to make appropriate decisions to:

• Reduce costs
• Increase sales
• Raise profitability
• Purchase new capital assets
• Best sources of financing, duration, etc.

Managers can now make informed choices to:

• Allocate human resources
• Continue or discontinue certain activities of the business
• Purchase or rent certain equipment used for the production of goods/services
• And many other vital things