Objective of Accounting: Protecting Business Assets
Accounting serves multiple objectives, and one of its primary goals is to protect business assets. This involves a systematic approach to managing and safeguarding the resources of an organization.
Understanding Business Assets
- Business assets encompass all valuable resources owned by a company, including cash, inventory, property, and equipment.
- Protecting these assets is crucial for maintaining the financial health and operational continuity of the business.
Role of Accounting in Asset Protection
- Record Keeping: Accounting ensures accurate documentation of all transactions related to assets. This includes purchases, sales, and depreciation, which can help identify any discrepancies or losses.
- Monitoring and Valuation: Regular assessment of asset values allows businesses to keep track of their worth and make informed decisions regarding investment, insurance, and sales.
- Internal Controls: Implementing effective internal controls through accounting practices helps prevent theft, fraud, and mismanagement of assets. This may include segregation of duties and regular audits.
- Compliance and Reporting: Adherence to legal and regulatory standards through proper accounting practices safeguards assets against potential liabilities and penalties, ensuring the company operates within the law.
Conclusion
In summary, accounting plays a vital role in protecting business assets by providing accurate records, enabling effective monitoring, establishing internal controls, and ensuring compliance with regulations. By prioritizing asset protection, businesses can enhance their stability and long-term success.

To ascertain the operational profit or loss : Accounting helps in ascertaining the net profit earned or loss suffered on account of carrying the business.