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Objective of accounting
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Objective of accounting Related: Accounting Principles, Fundamentals ...
Objectives of Accounting
1. Identification and recording of transactions
The primary object of accounting is to identify the financial transactions and to record these systematically in the books of accounts. As a result, the true nature of each and every transaction is known without much exercise of memory.
With this end in view the transactions are primarily recorded in general and in a special journal and later on permanently various accounts are kept in the ledger.
2. Ascertainment of results
Every business concern is interested to know its operating results at the end of a particular period.
The amount of profit or loss for a particular period of a business concern can be ascertained by preparing income statement with the help of ledger account balances of revenue nature.
Surplus or deficit of revenue for a particular period of a non-trading concern can also be ascertained by preparing income and expenditure account or statement.
3. Ascertainment of financial affairs
Ascertainment of debts-liabilities, property, and assets i.e. total financial affairs of an organization at a particular date is another important object of Accounting.
Financial affairs of a concern at a particular date can be ascertained by preparing a balance sheet.
The balance sheet is the statement of assets and liabilities of a concern at a particular date.
4. Keeping accounts of cash
Cash book is a prominent book of the books of accounts. Cash receipts and cash payments are accounted for in this book. A number of daily cash receipts, payments, cash in hand and cash at the bank can be known from this book.
Fraud, forgery, and misappropriation of money are reduced by keeping cash book scientifically and accurately.
5. Control over assets and liabilities
For running a business successfully a businessman is to acquire various assets like land, building, machinery etc.
He is to face various debts and liabilities like accounts payable, notes payable, loan, bank overdraft etc. side by side with die acquisition of assets.
The actual position of these debts-liabilities, property, and assets can be ascertained through the proper keeping of accounts.
A businessman can take the right steps for controlling the quantity of assets decrease and liability increase.
6. Controlling money defalcation and cost
Prevention of money defalcation through fraud and forgery and controlling of the cost of a concern are also the main objects of Accounting.
Prevention of money defalcation and cost control become easier if accounts are kept scientifically.
7. Providing economic data
Another noble object of Accounting is to provide the concerned parties with all economic information preparing financial statements and reports etc. in time.
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Objective of accounting Related: Accounting Principles, Fundamentals of Accounting
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Objective of accounting Related: Accounting Principles, Fundamentals of Accounting for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Objective of accounting Related: Accounting Principles, Fundamentals of Accounting covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Objective of accounting Related: Accounting Principles, Fundamentals of Accounting.
Objective of accounting Related: Accounting Principles, Fundamentals of Accounting for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Objective of accounting Related: Accounting Principles, Fundamentals of Accounting covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Objective of accounting Related: Accounting Principles, Fundamentals of Accounting.
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