Question

Define accounting and various objectives of accounting

Answer 1

"Accounting is the language of business transactions. Given the limitations of human memory, themain objective of accounting is to maintain 'a full and systematic record of all business transactions. 2. To ascertain profit or loss of the business: ... A comparison of income and expenditure gives either profit or loss."

Answer 2

Accounting is the process of identifying,measuring,recording and communicating the required information relating to the economic events of an organisation to the interested users of such information.The objectives of accounting are as follows

i) Maintenance of Records of Business Transactions-The primary objective of accounting is to maintain proper records of business transactions.In this way, it is used for the maintenance of a systematic record of all financial transactions in book of accounts.A proper and complete record of all business transactions are kept regularly with the help of accounting.

ii) Calculation of Profit and Loss-The owners of business are always interested in having an idea about the net results of their business operations periodically,i.e whether the business has earned profits or incurred losses.Thus, another objective of accounting is to ascertain the profit earned or loss sustained by a business during an accounting period. 

iii) Presentation of the Financial Position of the Business - One of the objectives of accounting is to ascertain the financial position of the business concern in the form of its assets and liabilities at the end of every accounting period. A proper record of resources owned by business organisation (Assets) and claims against such resources (Liabilities) facilitates the preparation of a statement known as balance sheet position statement.

iv) Providing Accounting Information to its Users - The accounting information generated by the accounting process is communicated in the form of reports,statements,graphs and charts to the users who need  it in different decision situations. As already stated, there are two mains user groups, viz internal users, mainly management, who needs timely information on cost of sales,profitability etc.