" Accounting books are made to help the business it self, and all the outsiders of the business who invest or take decisions according to the transactions of a business. If these books are not accurate, then all of these decision makers will suffer. A business with an inaccurate financial statement will face difficulty in planning future investments, paying back their loans, paying to their creditors and even in their day to day running of the business. Inaccurate accounting books, will lead to inaccurate decisions and therefore inaccurate businesses. A small change in value of one of the accounts, may not be seems much important, but it has got very important effects on the business. For example overstating the profit figure for the year, might be interesting for the owners at the beginning, and may make them think that it is not important and will not effect any one. But this small change will mislead the creditors, banks, financial institutions, shareholders, competitors and even those who may wish to buy future shares from the company. This will also affect the business it self.
There are different principles and rules to be followed by accountants, which are the same as laws of accounting. Some accountants do not follow these principles because of the company's profit. Accountants break these rules when the business is trying to pay lesser taxes, or not to pay back to their creditors. There fore the financial statements being prepared by such companies are neither accurate nor precision. For an accountant to be ethical and prepare accurate financial statements, it is important to follow the rules and principles of accounting. The first principle and the most important principle is conservation. "The assumption of conservation is justified by accountants because of the desire to act prudently and to err on the side of safety." (Said Holmes, Hodgson & Nevell, 1991, p.131). This means that the values shown in the books are either the exact value that the business owns, or less than the real value.