Answer the following questions :
What are the objectives of Book-keeping and Accountancy?
What are the objectives of Book-keeping and Accountancy?
Objectives of Book-keeping and Accountancy:
1. Recording Business Transactions Systematically- It aims at recording a huge number of business transactions in the books of accounts in a systematic and organised manner. This systematic record of transactions helps in eliminating the chances of errors and frauds in the business that can take place while carrying out business activities.
2. Determining Profit or Loss- Every business organisation is interested in knowing its net results in terms of profits or losses for a particular accounting period. It is ascertained by preparing the income statements for an accounting period. Income statements include Trading Account and Profit and Loss Account. These statements record the various items of revenue and expense of a business. The difference between revenue and expense is regarded as profit or loss during a year.
3. Assessment of Financial Position- Determining the profits or losses from business activities is not enough. It is also very important for a business to know its financial position, i.e. the strengths and weaknesses of the business. This can be easily assessed by preparing a Balance Sheet at the end of an accounting period. Balance Sheet is a statement showing various assets and liabilities of a business prepared for a particular accounting period.
4. Assistance to Management- One of the important objectives of accounting is to assist the management by providing them vital and relevant information. Management uses this information for effective decision-making, formulating plans and efficient control over business activities, etc.
5. Assessment of Progress of Business- Accounting helps in comparing the results of two or more periods. This, in turn, helps in assessing the trends of growth and progress of a business.
6. Detection and Prevention of Errors and Frauds - There is always a possibility of errors and frauds in a business while carrying out its activities. The chances of their occurrence is minimised to a great extent by maintaining a systematic record of various business transactions.
7. Communicating Accounting Information- An important step in the accounting process is communicating the financial and accounting information to various users including both internal and external users. This assists the users to understand and interpret the accounting data in a meaningful and appropriate manner without any ambiguity.
8. Determining Tax Liability- A systematic record of business activities helps in ascertaining the tax liabilities of a business.
1. Recording Business Transactions Systematically- It aims at recording a huge number of business transactions in the books of accounts in a systematic and organised manner. This systematic record of transactions helps in eliminating the chances of errors and frauds in the business that can take place while carrying out business activities.
2. Determining Profit or Loss- Every business organisation is interested in knowing its net results in terms of profits or losses for a particular accounting period. It is ascertained by preparing the income statements for an accounting period. Income statements include Trading Account and Profit and Loss Account. These statements record the various items of revenue and expense of a business. The difference between revenue and expense is regarded as profit or loss during a year.
3. Assessment of Financial Position- Determining the profits or losses from business activities is not enough. It is also very important for a business to know its financial position, i.e. the strengths and weaknesses of the business. This can be easily assessed by preparing a Balance Sheet at the end of an accounting period. Balance Sheet is a statement showing various assets and liabilities of a business prepared for a particular accounting period.
4. Assistance to Management- One of the important objectives of accounting is to assist the management by providing them vital and relevant information. Management uses this information for effective decision-making, formulating plans and efficient control over business activities, etc.
5. Assessment of Progress of Business- Accounting helps in comparing the results of two or more periods. This, in turn, helps in assessing the trends of growth and progress of a business.
6. Detection and Prevention of Errors and Frauds - There is always a possibility of errors and frauds in a business while carrying out its activities. The chances of their occurrence is minimised to a great extent by maintaining a systematic record of various business transactions.
7. Communicating Accounting Information- An important step in the accounting process is communicating the financial and accounting information to various users including both internal and external users. This assists the users to understand and interpret the accounting data in a meaningful and appropriate manner without any ambiguity.
8. Determining Tax Liability- A systematic record of business activities helps in ascertaining the tax liabilities of a business.
