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Monday, October 12, 2020

objectives of Accounting

 

Objectives of Accounting

The main objectives of accounting are:

To maintain a systematic record of business transactions

  • Accounting is used to maintain a systematic record of all the financial transactions in a book of accounts.
  • For this, all the transactions are recorded in chronological order in Journal and then posted to principle book i.e. Ledger.

To ascertain profit and loss

  • Every businessman is keen to know the net results of business operations periodically.
  • To check whether the business has earned profits or incurred losses, we prepare a “Profit & Loss Account”.

To determine the financial position

  • Another important objective is to determine the financial position of the business to check the value of assets and liabilities.
  • For this purpose, we prepare a “Balance Sheet”.

To provide information to various users

  • Providing information to the various interested parties or stakeholders is one of the most important objectives of accounting.
  • It helps them in making good financial decisions.

To assist the management

  • By analysing financial data and providing interpretations in the form of reports, accounting assists management in handling business operations effectively.

https://byjus.com/commerce/class-11-accountancy-chapter-1-introduction-to-accounting/

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