Functions of Accounting :

The following are the main functions of accounting:

(i) Keeping Systematic Records: Accounting is done to keep a systematic record of financial transactions.

(ii) Protecting and Controlling Business Properties: Accounting helps to see that there is no unauthorized use or disposal of any assets or property belonging to the firm, because proper records are maintained. Accounting will furnish information about money due from various persons and money due to various parties. The firm can see that all amounts due to it are recovered in due time and that no amount is paid unnecessarily.

(iii) Ascertaining the Operational Profit/Loss: Accounting helps to determine the results of the activities in a given period, usually a year, i.e. to show how much profit has been earned or how much loss has been incurred. This is done by keeping a proper record of revenues and expenses of a particular period and then matching the revenues with the corresponding costs.

(iv) Ascertaining the Financial Position of the Business: Balance sheet is prepared to ascertain the financial position of the firm at the end of a particular period. It shows the values of the assets and the liabilities of the business entity.

(v) Facilitating Rational Decision Making: Accounting facilitates collection, analysis and reporting of information at the required point of time to the required levels of authority in order to facilitate rational decision making.