Question

Define accounting and write down its advantages for the business firm

Answer 1

Accounting is the process of collecting, recording,  classifying,  summarising and communicating financial information to the users.  Advantages are as follows: 1.Financial information is known through accounting 2. It assist the management in drawing business plans,  making decisions and exercising control over the affairs of the business 3. The accounting record provides the information required by the management from time to time 4. Helps in comparative study 5. Helps in settlement of tax liabilities 6. Facilitates loans 7. Evidence in court: systematic recorded as a good evidence in court 8. Facilitates sale of business 9. Assistance in the event of insolvency 10. Helpful in partnership accounts