define accounting and it's functions
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Answer:
Accounting is a process, which systematically and comprehensively records business events and transactions, and translate it into the financial information of the business entity to assist the stakeholders in the decision-making proces
Accounting is a process, which systematically and comprehensively records business events and transactions, and translate it into the financial information of the business entity to assist the stakeholders in the decision-making procesExplanation:
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Answer:
Definition: Accounting is a process, which systematically and comprehensively records business events and transactions, and translate it into the financial information of the business entity to assist the stakeholders in the decision-making process.
Functions of Accounting
Systematic record keeping: The first and foremost function of accounting is the systematic record keeping of the financial transactions, on a regular basis.
Facilitating rational decision making: Another important function of accounting is to communicate the results, i.e. the net profit or loss to the users, with the help of financial statements, so as to help the interested parties in rational decision making.
Legal compliance: The accounting statements must be prepared keeping in mind the compliance with the relevant laws.
Protection of business assets: Accounting not only keeps a record of all the business assets but also ensures no unauthorized use of assets or property belonging to the enterprise.
Determination of Profit/loss: Accounting plays a very important role in the ascertainment of profit earned or loss sustained by the enterprise in an accounting period. This is possible only when a proper record of all the business transactions, revenues and expenses are maintained.
Ascertaining the profitability, liquidity and solvency of the entity: With the help of the financial statement, i.e. Balance sheet and profit and loss account, the financial position of the enterprise can easily be ascertained.