What are the needs of Accounting? In short
Answers
Answer:
Accounting plays a vital role in running a business because it helps you track income and expenditures, ensure statutory compliance, and provide investors, management, and government with quantitative financial information which can be used in making business decisions.
Answer:
1. Systematic Recording of Transactions
The first objective of accounting is to record the business transactions and events by proper classification and book-keeping in proper books to show assets liabilities capital and profit and loss.
2. Determination of Profit and Loss
Business Transactions are done for Earning Profits. Every businessman wants to know the results of transactions done in a specific period. For these, we prepare a profit and loss account.
Thus, Excess of income over Expenditure shows Profit for the period and if Expenditure is more than income then there is a loss.
3. Preparation of Tax Returns
One of the main objectives of Accounting is to provide the information for filling up the tax Returns of-
a. income tax
b. wealth tax
c. Sales tax
d. value-added tax
e. tax on dividends
f. exercise duty
g. import-export duties
h. export incentive etc.
Thus, the Assessment of tax is done on the Basis of Financial Statements and Vouchers.
4. Providing Necessary information to Financial institution
If a Businessman Requires money from the financial institution, Much More information Regarding business is to be given to these institutions.\
Such as previous years’ Sells, stock position, profitability, and financial position.
5. The depiction of Financial Position
Every Businessman wants to know the position of his invested money.
The balance sheet is the statement of Assets and liabilities of the business at a particular point of the time and helps in an Ascertaining the financial health of the business. Need and Objectives of Accounting.