Functions of Accounting (BBA 1st Semester Study Material)
To Meet Legal Requirements: The provision of various laws like the income tax act, sales tax act, the companies act, etc. require a business concern to maintain necessary records and submit certain financial statements or reports. Accounting satisfies the needs of these laws by maintaining proper records.
Secure the Properties of the Business: The Second important function of accounting is to protect the properties of the business. By maintaining proper records of various properties of the business and providing, update information of the various properties of the business to the management, accounting enables the management to Exercise proper control over the use of the properties of the business.
To keep systematic Record of the Financial Activities : The first important function of accounting is to make a systematic record of the financial activities of the business In accounting business transactions are properly recorded, classified and summarized into financial statement like the profit and loss account and the balance sheet.
To Analyse the Financial Result : Just as a language is used as a means to communication, so accounting communicates the financial result (i.e,. profit and loss) and other valuable, financial information to the various interested groups like the officer and the staff of firm, the owner. The creditor the employees of the firm, the government, and the consumer, etc.
To Prevent and Detect Errors and Frauds: Since the proper record is kept in a systematic manner so if any error or fraud takes place, it is easily detected.