What is Accounting? Define its Objectives - Bzziii.com

“Accounting is an art of recording, classifying and summarising in a significant manner and in terms of money transactions and events that are, in par
What is accounting? Define its objectives.









“Accounting is an art of recording, classifying and summarising in a significant manner and in terms of money transactions and events that are, in part at least, of a financial character and interpreting the results thereof.”
So, Accounting is the process of collecting, recording, summarising and communicating financial information to its users for correct decision making.

Objectives of Accounting:

To keep a systematic record of all business transactions

Accounting is used to maintain a systematic record of all the financial transactions in the books of accounts of an entity. For this purpose, all transactions have recorded the books of accounts in chronological order in Journal and then posted to different ledger accounts.

To ascertain profit and loss & ascertainment of results

Every business starts with the motive to earn profits. We can say that profits are the backbone of any business. Also, the users of financial statements are very keen to know the net results of business operations periodically.

To check whether the business is earning profits or making losses, we prepare a statement or account called “Profit & Loss Account or Statement of Profits & Losses”.

To determine the financial position of an entity

By accounting for each and every asset owned by an entity and liabilities incurred by the entity, we can get to know the exact financial position of our business at a particular date. In this regard, we prepare a “Balance Sheet” to check the value of assets and liabilities.

To provide information to various users of Financial Statement

Users of financial statements play a major role in the company. The financial statements of an entity can affect the decision-making process of the user of the financial statement. They also participate in future business growth. Providing information to the various interested parties or stakeholders is one of the most important objectives of accounting





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