Main Functions of Accounting.



  1. 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

  1. Facilitate credit transactions:

Accounting records facilitates credit transactions since these records will determine the amount due to creditors and due to debtors.

  1. 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.

  1. 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.

  1. 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.

  1. Acts as a base for planning:

Accounting records provides sufficient data relating to sales, profit, investments; for making decisions about future programs.

*Take Note.



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