Substitute of memory− As, it is beyond human capabilities to remember each and every business transaction, so accounting plays an important role in recording these transactions in the book of accounts.
Assistance to management− Management uses accounting information for short term and long term planning of business activities and to control various costs and budgets.
Comparative study− In order to ascertain the performance of the business, accounting enables comparison of current year’s profit with that of previous years (intra-firm comparison)and also with other firms in the same business (inter-firm comparison).
Evidence in court− It acts as evidence that can be used or presented in the court, if any discrepancy arises in the future.
Regards