What are the functions of accounting?
Important functions of accounting are:-
1. A systematic record of business transactions.
Keeping a systematic record of business transactions, posting them to the ledger, and ultimately preparing the final accounts is the first main function of accounting.
2. Protecting the property of the business.
For performing this function the accountant is required to devise such a system of recording information so that assets of the business are not put to wrong use and a complete record of the assets of the concern is available without any difficulty.
3. Communicating results to interested parties.
This function is required to supply meaningful information about the financial activities of the business to the various parties i.e. owners, creditors, investors, employees, government research scholars, and the manager at the right time.
4. Compliance with legal requirements.
The accounting system must be such that it may be able to comply with the legal requirements. Under various enactments, a businessman is required to file various statements e.g. income tax return, return for sale tax purposes, etc.
5. Stewardship. In the case of companies.
the management is entrusted with the resources of the enterprise. The managers are expected to act as true trustees of the funds and accounting helps them to achieve the same.
6. Assistance to Managegents.
Accounting assists the management in planning, evaluation of performance, control, and decision-making by providing required information.
7. Fixing Responsibility.
Accounting helps in the determination of the profitability of different departments of the enterprise and ultimately helps in fixing the responsibility of departmental heads.
Given seven topics are the functions of accounting. Maybe you understand what are the functions of accounting.
