Objectives or functions of Accounting

Accounting has the following main objectives or functions:

A)To keep complete and systematic records: The first aim/objectives or function of accounting is to keep systematic and complete record of all financial transactions for future reference  and also to avoid the possibility of errors and frauds .First of all, it records all financial transactions in journal and then after they are posted into ledger as per specified rules and principles.

B)To ascertain profit or loss: The second objectives or function ot accounting is to ascertain operating result i. e, profit or loss of a business for a period.
Operating result. i. e, profit or loss is determined by preparing trading and profit and loss account for a particular period of time.

C)To analyse and interpret the financial information :Accounting analyses and interpret the results of business to draw conclusions. With the help of such conclusions, the parties concerned in the business can have full information about its profitability and financial position.

D)To depict the financial position :A concern, whether trading or non-trading should know its true financial position. For this purpose ,it prepares a balance sheet at the end of every year ,which informs about its position of assets ,liabilities and capital and reflect economic strengths and weakness of business.

E)To make information available to various users: It is another important objective or function of accounting. Generally, owners who are also interested in the activities of a business directly or indirectly .Investors are interested to know about profitability. However, creditors and banks have interest on liquidity and solvency of the business.