3. Objectives of Accounting

OBJECTIVES OF ACCOUNTING

• Objective of accounting may differ from business to business depending upon their
• specific requirements. However, the following are the general objectives of accounting.
• Keeping systematic record.
• Ascertain the results of the operation.
• Ascertain the financial position of the business.
• Portray the liquidity position.
• To provide information to various parties.
• To facilitate rational decision – making.
• To satisfy the requirements of law

ACCOUNTING

• The object of accounting is to record, classify, summarize, analyze, and interpret the business transactions and ascertain financial results and to communicate to various parties.
• It has a wider scope.
• It is concerned with all levels of Management.

ADVANTAGES OF ACCOUNTING

• Replacement of memory
• Evidence court
• Assessment of taxation liability
• Comparative study
• Sale of business
• Assistance to the insolvent person
• Assistance to various parties
• Facilities in raising loans
• Information regarding financial position.

LIMITATIONS OF ACCOUNTING

• Records only monetary transactions.
• Unsuitable for forecasting.
• No realistic information
• Personal bias of the accountant affects the accounting statements .
• Incomplete information.
• Profit no real test of managerial performance .
• Historical in nature.
• Window dressing in balance sheet.