Keeping Systematic Records:
This is the fundamental function of accounting. The transactions of the business are properly recorded, classified and summarized into final financial statements – income statement and the balance sheet.
Protecting The Business Properties:
The second function of accounting is to protect the properties of the business by maintaining proper record of various assets and thus enabling the management to exercise proper control over them.
Communicating The Results:
As accounting has been designated as the language of business, its third function is to communicate financial information in respect of net profits, assets, liabilities, etc., to the interested parties.
Meeting Legal Requirements:
The fourth and last function of accounting is to devise such a system as will meet the legal requirements. The provisions of various laws such as the companies act, income tax act, etc., require the submission of various statements like income tax returns, annual accounts and so on. Accounting system aims at fulfilling this requirement of law.
This is the fundamental function of accounting. The transactions of the business are properly recorded, classified and summarized into final financial statements – income statement and the balance sheet.
Protecting The Business Properties:
The second function of accounting is to protect the properties of the business by maintaining proper record of various assets and thus enabling the management to exercise proper control over them.
Communicating The Results:
As accounting has been designated as the language of business, its third function is to
communicate financial information in respect of net profits, assets, liabilities, etc., to the interested parties.
Meeting Legal Requirements:
The fourth and last function of accounting is to devise such a system as will meet the legal requirements. The provisions of various laws such as the companies act, income tax act, etc., require the submission of various statements like income tax returns, annual accounts and so on. Accounting system aims at fulfilling this requirement of law.
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