The main purposes or objectives of accounting can be expressed as follows:
1. To Identify Financial Transactions
Accounting helps to identify financial transactions can be expressed in monetary terms) from large volume of business transactions.
2. Proper Recording Of Business Transactions
Accounting records financial transactions of business properly and systematically in a chronological order.
3. Ascertainment Of Profit Or Loss
Profit or loss of the business can be ascertainment by preparing income statement at the end of the accounting period.
4. Ascertainment Of Financial Position
Another main objective of accounting is to know the actual financial position of the business. Financial position is ascertained by preparing balance sheet at the end of the year.
5. Settlement Of Tax
5. Settlement Of Tax
Tax liability is determined with the help of financial data and information provided by accounting.
6. Providing Financial Information
Accounting provides financial information to the management and others users.
7. To Help Decision Making
Accounting helps the management to make rational decisions. It also helps to formulate future plans and policies of the business.
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8. Prevention Of Errors
Errors and frauds can be detected with the help of trial balance and financial accounts. So, accounting helps to prevent such errors and frauds by ensuring arithmetical accuracy.
9. Accounting helps to know the current position of assets and liabilities.
