Functions of Accounting (accounting functions)

Functions of Accounting (accounting functions):

Learning Objectives:

  1. 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:

  1. Definition and Explanation of Bookkeeping
  2. Important Bookkeeping Terms
  3. Double Entry System of Bookkeeping
  4. Single Entry Vs Double Entry System of Bookkeeping
  5. Definition and Explanation of Accounting
  6. Branches of Accounting
  7. Functions of Accounting
  8. Parties Interested in Accounting Information
  9. Systems of Accounting – Cash System of Accounting and Accrual System of Accounting
  10. Bookkeeping Vs. Accounting/Difference Between Bookkeeping and Accounting
  11. Accounting Cycle

Other Related Accounting Articles:

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