Main Functions of Accounting.
MAIN FUNCTIONS OF ACCOUNTING.
- Ascertainment of profit and loss:
Accurate and complete recording of all business transactions is essential because this information will be helpful to determine where there was profit and loss
- Facilitate credit transactions:
Accounting records facilitates credit transactions since these records will determine the amount due to creditors and due to debtors.
- Assessment of Tax:
For accurate assessment of tax , accounting records must be maintained properly, otherwise a business enterprise may be required to pay high tax to the government in form of penalties.
- Evaluation of Assets and liabilities:
Statement of assets and liabilities can be prepared on any particular date in a document known as A balance sheet. This is normally required by prospective investors and or creditors.
- Tool for control:
Proper control of unnecessary expenses and misappropriation of funds is essential . A proper and accurate accounting system will be helpful to maintain this control.
- Acts as a base for planning:
Accounting records provides sufficient data relating to sales, profit, investments; for making decisions about future programs.