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Accounting Basics and Objectives and Scope of Accounting

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Objectives and Scope of Accounting
Let us go through the main objectives of Accounting:
To keep systematic records - Accounting is done to keep systematic record of
financial transactions. The primary objective of accounting is to help us collect financial data
and to record it systematically to derive correct and useful results of financial statements.
To ascertain profitability - With the help of accounting, we can evaluate the profits
and losses incurred during a specific accounting period. With the help of a Trading and Profit
& Loss Account, we can easily determine the profit or loss of a firm.
To ascertain the financial position of the business - A balance sheet or a
statement of affairs indicates the financial position of a company as on a particular date. A
properly drawn balance sheet gives us an indication of the class and value of assets, the
nature and value of liability, and also the capital position of the firm. With the help of that,
we can easily ascertain the soundness of any business entity.
To assist in decision-making - To take decisions for the future, one requires
accurate financial statements. One of the main objectives of accounting is to take right
decisions at right time. Thus, accounting gives you the platform to plan for the future with
the help of past records.
To fulfill compliance of Law - Business entities such as companies, trusts, and
societies are being run and governed according to different legislative acts. Similarly,
different taxation laws (direct indirect tax) are also applicable to every business house.
Everyone has to keep and maintain different types of accounts and records as prescribed by
corresponding laws of the land. Accounting helps in running a business in compliance with
the law.

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Objectives and Scope of Accounting Let us go through the main objectives of Accounting: ● To keep systematic records - Accounting is done to keep systematic record of financial transactions. The primary objective of accounting is to help us collect financial data and to record it systematicall ...
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