The main functions of accounting are as follows
A. Recording
It is concerned with recording all the financial transactions in orderly manner in the proper books of accounts. Transaction are recorded in journal in chronological manner.
B. Classifying
It deals with classification of recorded so as to group similar transaction at one place. It is done in ledger, where similar transaction are recorded at one place under individual account heads e.g.,in sales account all sale of goods recorded purchase account, all purchases of goods are recorded.
C. Summarizing
It involves presenting classified transactions in a manner useful to both its internal and external users. It involves preparation of financial statement I.e. profit and loss account and balance sheet etc.
D. Analyzing
The recorded data in financial statement is analyzed to make useful interpretation. The figures given in financial statement need to be put in a simplified manner e.g. all items relating to fixed assets are placed at one place while long term liabilities at one place.
E. Interpretation
It deals with explaining the meaning and significance of the data simplified. The accountants should interpret the statement in a manner useful to users. It aims st drawing meaningful conclusions from the information. E.g. liquidity position, profitability position etc.
F. Communicating
The accounting information is to a proper form and manner to the persons interested in the business. If involves preparation and distribution of reports to the users to make decisions.
A. Recording
It is concerned with recording all the financial transactions in orderly manner in the proper books of accounts. Transaction are recorded in journal in chronological manner.
B. Classifying
It deals with classification of recorded so as to group similar transaction at one place. It is done in ledger, where similar transaction are recorded at one place under individual account heads e.g.,in sales account all sale of goods recorded purchase account, all purchases of goods are recorded.
C. Summarizing
It involves presenting classified transactions in a manner useful to both its internal and external users. It involves preparation of financial statement I.e. profit and loss account and balance sheet etc.
D. Analyzing
The recorded data in financial statement is analyzed to make useful interpretation. The figures given in financial statement need to be put in a simplified manner e.g. all items relating to fixed assets are placed at one place while long term liabilities at one place.
E. Interpretation
It deals with explaining the meaning and significance of the data simplified. The accountants should interpret the statement in a manner useful to users. It aims st drawing meaningful conclusions from the information. E.g. liquidity position, profitability position etc.
F. Communicating
The accounting information is to a proper form and manner to the persons interested in the business. If involves preparation and distribution of reports to the users to make decisions.
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