Functions of Accounting (accounting functions):
What are the important functions of accounting?
Record Keeping Function:
The primary function of accounting is to keep a systematic record of financial transaction – journalisation, posting and preparation of final statements. The purpose of this function is to report regularly to the interested parties by means of financial statements.
Protect Business Property:
The second function of accounting is to protect the property of business from unjustified and unwanted use. The accountant thus has to design such a system of accounting which protect its assets from an unjustified and unwanted use.
Legal Requirement Function:
The third function of accounting is to devise such a system as will meet the legal requirements. Under the provision of law, a business man has to file various statements e.g., income tax returns, returns for sales tax purpose etc. Accounting system aims at fulfilling the requirements of law. Accounting is a base, with the help of which various returns, documents, statements etc., are prepared.
Communicating the Results:
Accounting is the language of business. Various transactions are communicated through accounting. There are many parties – owners, creditors, government, employees etc, who are interested in knowing the results of the firm. The fourth function of accounting is to communicate the results to interested parties. The accounting shows a real and true position of the firm of the business.
You may also be interested in other articles from “bookkeeping chapter” chapter:
- Definition and Explanation of Bookkeeping
- Important Bookkeeping Terms
- Double Entry System of Bookkeeping
- Single Entry Vs Double Entry System of Bookkeeping
- Definition and Explanation of Accounting
- Branches of Accounting
- Functions of Accounting
- Parties Interested in Accounting Information
- Systems of Accounting – Cash System of Accounting and Accrual System of Accounting
- Bookkeeping Vs. Accounting/Difference Between Bookkeeping and Accounting
- Accounting Cycle
Other Related Accounting Articles: