Respuesta :
Through the recording, classifying, summarizing, and interpretation of financial events in an organization, the function of Accounting helps managers make good decisions about the firm's operations.
Accounting is the process of identifying events of a financial nature, recording them in a journal, classifying them into the respective accounts, and aggregating them in the income statement and balance sheet. and communicate the results to those who use this information. owners, government, creditors, investors, etc. at least, of a financial nature and to interpret the results.
In 1970, the American Institute of Certified Public Accountants revised the definition and stated: “The function of accounting is to provide quantitative information, mainly of a financial nature, about economic entities, in order to useful for making economic decisions.
Objectives of Accounting:
- Systematic recording of business transactions - It is necessary to keep systematic records of all business transactions because of remembering such a large number of transactions. is beyond human capacity. Neglecting to record any transactions can lead to false and misleading results.
- Determining Profit or Loss - To determine net profit at the end of an accounting period, we need to calculate profit or loss. For this purpose, a trading account and a profit and loss account are prepared. It provides information about the quantity of goods bought and sold, the costs incurred and the amount earned in a year.
- Establishing the Financial Condition of the Business - Establishing insufficient profits or losses; The owner is also interested in knowing the financial position of his business, i.e. the value of his assets, the amount of his liabilities, the net increase or decrease in his capital. This goal is accomplished by the preparation of a balance sheet that helps determine the true financial position of the company.
- Management Support - Systematic accounting helps management to make effective decisions, effectively control cash management policies, prepare budgets and forecasts, and more.
- Evaluating a company's progress - Accounting helps in assessing a company's progress from year to year because accounting facilitates comparisons between companies and within companies.
- Fraud and Error Detection and Prevention - Fraud and errors, mismanagement and financial waste need to be detected and prevented. Systematic recording facilitates the detection and correction of frauds, errors and inefficiencies if they arise.
- Communicating Accounting Information to Various Users - An important step in the accounting process is communicating accounting and financial information to a variety of users, including internal and external users such as owners ownership, management, government, employees, tax authorities, etc. This helps users to understand and interpret accounting data meaningfully and appropriately without any ambiguity.
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