Bell Ringer: Prompt: In your own words explain why keeping accurate financial records is important for a business. Provide one example of a problem a business might face if its accounting is incorrect. Essential Question: How does understanding the business operating cycle and accounting principles help entrepreneurs make better financial decisions?

Keeping accurate financial records is crucial for a business because it provides a clear picture of the company's financial health, helps track income and expenses, and ensures tax laws. Accurate records also facilitate better decision-making by providing reliable data for analysis and forecasting.<br /><br />For example, if a business fails to accurately record its expenses, it may overestimate its profits, leading to poor financial planning and potentially harmful financial decisions.<br /><br />Understanding the business operating cycle and accounting principles is essential for entrepreneurs because it helps them make informed financial decisions. By understanding these principles, entrepreneurs can identify trends, manage cash flow effectively, and make strategic investments. This knowledge also aids in accurate financial reporting and compliance with regulations, which is vital for maintaining the business's reputation and avoiding legal issues.