Functions of Accounting
Accounting has various functions in various fields such as in the society, everyday life, the organization, an individual, creating values and accountability, technology, state, economics, public finance, banking sector, production, business and commerce etc. The major functions of accounting are outlined below:
- Preparation of Financial Statements: The major function of accounting is to prepare four financial statements – income statement, owner’s equity statement, balance sheet, and cash flow statement.
- Financial Reporting: Preparing financial statements with all necessary notes and disclosers, accounting reports the users about the financial positions of the
- Providing Information: Accounting provides information of organizational activities to the users timely and effectively for taking next best action.
- Data Processing Functions: Accounting processes all types’ raw data into an easy usable quality for the respective authorities.
- Stewardship Functions: In a sum, accounting performs the stewardship functions for the organization. Stewardship functions include financial transactions recording, classifying, summarizing, resulting, analyzing,
communicating and decisions making.
- Managerial Functions: As a whole, accounting performs the managerial functions for the organization. Managerial functions include business and non-business activities maintaining, budgeting, evaluating, and controlling.
- Analytical and Interpreting Functions: Accounting analyzes and interprets financial activities for next rectifications and improvements.
- Decision Making Functions: Accounting is the basic tool for making decisions by the users about their business and non-business interests.
- Controlling Functions: Managers control the organizational activities through accounting efforts.
- Management Consulting: Accounting is used for management consulting which ranges from the installing of basic accounting systems to helping companies determine whether they should use the space shuttle for high-tech research and development projects.
To gist up, accounting plays very important functions in all types of financial activities.