2 determine profit or loss another objective of

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2. Determine Profit or Loss: Another objective of accounting is to determine the financial performance, i.e., profit earned or loss incurred, for the accounting period. 3. Determine Financial Position : Another objective of accounting is to determine financial position. It is known from the Balance Sheet. Financial position of the business is as relevant for the users of financial statements as is the Income Statement. 4. Assisting the management : Another objective of accounting is to assist the management by providing financial information to it. The management often requires financial information for decision-making, exercising control, budgeting and forecasting. 5. Communicating Accounting Information to users : Another objective of accounting is to provide accounting information to users who analyse them as per their individual requirements. 6. Protecting Business Assets : Another objective of accounting is to have records of assets owned by the business. Accounting maintains record of assets owned by the business which enables the management to protect them and exercise control. The main functions of accounting are:- 1. Maintaining Systematic Accounting Records. The primary function of accounting is to maintain systematic accounting records of financial transactions and events. 2. Preparation of Financial Statements. Financial statements means final accounts prepared at the end of the accounting period. It includes Income Statement and (Profit and Loss Account or Statement of Profit and Loss, in the case of companies) and position statement (Balance Sheet).
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6 Address: Plot No 420, Behind Shopprix Mall, Vaishali Sector 5, Ghaziabad 201010 M: 9999907099, 9818932244 O: 0120-4130999 Website: , 3. Meeting Legal Requirements. Accounting records are accepted as evidence by the court of law if they are maintained systematically following the accounting principles and concepts. 4. Communicating the Financial Data. It is yet another function of accounting to communicate the financial data to the users. 5. Assistance to Management. Management often requires information beyond the information conveyed by the financial data. Q.20. State the advantages of accounting. Ans. Advantages of accounting are:- 1. Financial Information about business : Financial performances during the accounting period, i.e., profit or loss and also the financial position at the end of the accounting period is known through accounting. 2. Assistance to Management : The management makes business plans, takes decisions and exercises control over the affairs on the basis of accounting information. 3. Replaces Memory : A systematic and timely recording of transactions obviates the necessity to remember transactions. The accounting record provides the necessary information.
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