Purpose of accounting is to record the business transactions. The basic purpose of accounting information is to be given more information these are useful for decision making. It should be in clear and systematic manner. The aim is to get answer easily and accurately.
What is the purpose of accounting?
Purpose of Accounting Information
The purpose of accounting for business entity is serves the needs and to have permanent record of the business at any time.
In a business the transactions are numerous. It is not possible to recall at a time how much money is spent and earned. This requires noting down in book for requirements.
Purpose Of Accounting Information And Standards
the Purpose and Objective of Accounting is answers to the following types of questions, by accurately, arises in business at any time the business man likes.
• What is the initial investment and expenses?
• What has happened to his investment?
• What is the result of the business transactions?
• What are the incomes and expenses?
• What is net income of the business?
• How much amount is receivable from customers to whom goods have been sold on credit?
• How much amount is payable to suppliers on account of credit purchases?
• What are the nature and value of assets possessed by the business concern?
• What is the value of outside liabilities?
• What are the nature and value of liabilities of the business concern?
Like that several types of questions are answered with the help of accounting. Purpose of the Accounting Cycle is cater the needs of the management of the entity and external users of the firm. accounting purpose complete the financial and bookkeeping works also.
The purpose of accounting information and standared is, firstly is useful for, to know net result of Business Operations. The result is Profit or Loss of business can be properly ascertained.
It is important to note that only those transactions related to business which can be expressed in terms of money are recorded.
The Overall Purpose of Accounting is to account or book-keeping the records mainly for
• To keep permanent record of the business transactions.
• To keep records of income and expenses in such a way should be want
• The net profit or net loss may be calculated.
• Keep records of assets and liabilities of the business.
• The financial position of the business may be ascertained.
• To keep control on expenses with a view to minimize the same in order to maximize profit.
• To know the names of the customers and the amount due from them.
• To know the names of suppliers and the amount due to them.
• To have important information for legal and tax purposes.
The purpose of accounting is also complement service functions. For instance Management decision-making, Planning, reviewing, revising, controlling and decision-making functions of the management are well aided by book-keeping records and reports. Read more.
Purpose of Financial Information is the Statutory or Legal requirements made against and for the business firm in relation to outsiders can be confirmed. And establish by producing the records as evidence in the court.
Businessmen requested to pay sales tax, income tax, etc. The tax authorities require them to submit their accounts. For this purpose, they have to maintain a record of all their business transactions. The accounting profit of the business entity is taken for tax purpose, like income tax, service tax, etc.
Originally posted 2015-03-17 00:41:05.