Main functions of accounting can be highlighted as follows:
1. Recording Of Financial Transactions
The primary function of accounting is to identify business transactions, summarize them in a chronological orders and to record them into the books of account properly.
2. Finding Out The Net Results
Trading account, profit and loss account and balance sheet are prepared at the end of every accounting period. It helps to find out the profit or loss and the financial position of the business.
3. Communicating The Financial Information
Accounting is used to communicate the financial facts such as profit, loss, financial position etc. to the management and other users (shareholders, employees, owners etc).
4. Fulfilling Legal Requirements
Accounting provides financial reports to the tax authorities and business regulators. So, it helps to comply with legal requirements.
5. Protecting The Properties
Accounting helps to protect assets and other properties of the business organization by maintaining proper recording.
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6. Future Planning
Management can make future plans and policies on the basis of financial data and information provided by the accounting .
