Functions of Accounting

Taking a summary view of the definitions given in Section, it is at once seen that accounting, as a process, involves - identifying, measuring, recording and communicating - economic information - expressible at least partially in terms of monetary units - to facilitate a quantified assessment of an organisation as well as episodic or dated situations thereof at any chosen date of reckoning - so as to aid in coming to informed judgement of its financial position, including in relation to other organisations bring dealt with - and thereby to enable decision-making by users of the information. Some of these aspects are highlighted in what follows : 

1. Accounting process has its inputs from a specific economic unit. 
2. It permits the development of a system of information to serve simultaneously, each of the several objectives of the organisation. 
3. It permits of no inconsistencies. 
4. Uncertainties in the data are at least reduced, if not eliminated, and occasions of uncertainty are duly annotated. 
5. The information developed and made available will be contextually relevant, free from bias, quantified and verifiable. Accordingly, the objectives of, and purposes achieved by, accounting are : 

• Sponsoring and facilitating decisions on the optimal use of limited resources and effectively monitoring the implementation of such use with appropriate controls and directions; 
• Keeping record of, and reporting on the use of, resources in consequence of Sl. No. (a); 
• By affording information for external parties, facilitating discharge of social responsibility; and 
• Through the above purposes, and periodically therewith, assisting management in policy formulation, decision-making, control in efficiently and effectively implementing the optimal decisions. 

In this context, the definition of Management Accounting suggested by the American Accounting Association, as elaborated  can be recalled. 

"Management Accounting is the application of appropriate techniques and concepts in processing historical and projected economic data of an entity to assist management in establishing plans for reasonable economic objectives and in the making of rational decisions with a view toward these objectives." 

The functions of management accounting as referred to above are achieved by the following actions and duties by those responsible for accounting : 

1. functioning as a repository and custodian of accounting and other economic information, 
2. making available relevant data, without bias, along with classification and analysis, to help in effective planning and decision-making, 
3. communicating the plans and decisions to all units of the organisation along line and functional responsibilities, 
4. developing historical and chronological fact sheets periodically for internal and external information, 
5. highlighting performance achievements with associated cost information, and 
6. to the extent possible and desirable, correlating the above actions to environmental factors, including political and social. 

Put differently, the contributing actions and duties can be broadly put as : (a) control and coordination function, (b) planning function, and (c) role in decision-making.