i) Record Keeping Function: The primary function of accounting relates to recording, classification and summary of financial transactions-journalisation. posting, and preparation of final statements. These facilitate to know operating results and financial positions. The purpose of this function is to report regularly to the interested parties by means of financial statements. Thus accounting performs historical function i.e., attention on the past performance of a business; and this facilitates decision making programme for future activities.
ii) Managerial Function: Decision making programme is greatly assisted by accounting. The managerial function and decision making programmes, without accounting, may mislead. The day-to-day operations are compared with some pre-determined standard. The variations of actual operations with predetermined standards and their analysis is possible only with the help of accounting.
iii) Legal Requirement function: Auditing is compulsory in case of registered firms. Auditing is not possible without accounting. Thus accounting becomes compulsory to comply with legal requirements. Accounting is a base and with its help various returns, documents, statements etc., are prepared.
iv) Language of Business: Accounting is the language of business. Various transactions are communicated through accounting. There are many partiesowners, creditors, government, employees etc., who are interested in knowing the results of the firm and this can be communicated only through accounting. Tppo asunting shows a real and true position of the firm or the business.
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