Objective of Accounting
The purpose of the accounting is as follows:
- Keeping systematic records: (Keeping systematic records) Accounting is done to keep financial transactions organized. This means accounting is used to arrange records in systematic manner.
- Detection of Operational Profit or Loss: Accounting helps in determining whether the net profit is being lost or loss is due to the operation of the business. . It is accomplished with proper accounting of the income and expenditure of a particular timeline. The profit and loss account is prepared at the end of the timeline and for the time being, if the amount of income is more than expense, then the earned income is called profit or profit here. If the expenditure is higher then it is called a loss or a las.
- To know the financial position of the business: The profit and loss account is known by the amount of profit or loss acquired in the business during a specific period of time. However, this is not enough. The trader would want to know about his financial position, that is, how the business situation is. This information comes from the balance sheet.
- Making judicious decisions: (To make judicial decisions) Accounting helps in making right decisions at the right time.
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