explain the Objectives of accounting and 9 Advantages of accounting

Objectives of Accounting

Objectives of accounting may differ from business to business depending upon their specific requirements.

  1. Maintenance of accounting records
    Accounting records are the basis for accounting work. The records have to be maintained systematically while maintaining the accounting records, and the generally accepted accounting conventions and concepts have to be followed. In recent years, the maintenance of books and records is relegated to lower-level employees. Still, required guidance has to be provided to them as and when necessary.
  2. Ascertainment of profit or loss
    Accounting is expected to ascertain and reveal the net result of the operations of a business. Various interested parties like owners, management, investors, and creditors should be supplied with the results of operations as per their specific requirements while finalizing the accounts, objectives approach is essential, combined with consistency and conservatism.
  3. Depiction of financial position
    A turn and fair view of the financial position should be presented. The properties and assets possessed by the business should be shown at appropriate valves as per the prevailing practices. The stake of creditors and owners in the business ahold be clearly presented all the material information must be clearly disclosed.
  4. Providing information
    In the recent providing information has become the most important objective of accounting making decisions concerning the use of limited resources including identification of crucial decision areas and determination of objectives and goals. effectively directing the controlling of an organization’s human and material resources.

Advantage of Accounting

  1. Systematic records
    All business transactions are recorded in the books of accounts. Any events or happening which has a financial effect are included in the accounting records. They are always at the disposal of the management for decision-making.
  2. Preparation of financial statements
    Results of business operations and the financial position of the concern are provided by accounting periodically this is essential for the distribution of profits to the owners and for plannings the future policies and programs by the management.
  3. Assessment of progress
    Accounting analyses and interprets financial statements to reveal the progress made in different areas and it also identifies areas of weakness and stagnation management is provided with a complete picture of the liquidity, profitability, and stability aspects of the business.
  4. Aid to decision making
    Management of a firm has to make innumerable routine and policy decisions while discharging its function accounting provided the relevant data to make the decision appropriate and effective.
  5. Statuary requirement
    Various legal requirements like maintenance of provided funds for employees, employees’ state insurance contribution of deduction of tax at source, filling of tax returns, etc., are properly fulfilled with the help of accounting.
  6. Information to interested groups
    Accounting supplies appropriate information to different interested groups such as owners, creditors, employees, financiers, tax authorities, and the government.
  7. Evidence in courts
    Accounting records are the basic source of evidence in courts of law in the settlement of disputes.
  8. Taxation problems
    Accounting records are the basic source for the computation and settlement of sales tax, income tax, and other local taxes.
  9. Merger of firms
    When two or more existing businesses decide to merge, accounting records are the basis for deciding the terms of the merger and any compensation payable as a consequence of the merger.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *