Objectives of Accounting

As seen above, accounting addresses the task of evolving and presenting the real position of a running business by bringing forth financial data and information concerning the business enterprise, so compiled and presented as to meet the needs of the management, investors and the public. The following steps help to accomplish the same. 

Maintenance of Records of Business 

Through recording, classification and summarising the financial data, one can visualize the economic history, as it were, of the organisation and the developing linkages with its environs and sister concerns. This helps in decisions being made as would affect/improve the organisation's future. 

Calculation of Profit and Loss 

As seen, the records are summarisable in the form of various financial statements income (and expenditure) statement (for the accounting period); and the position statement (as at the end of the each accounting period). From the statement of incomes and expenses, made out in detail, for any pedal, the net results of the business can be easily deduced for the period, as at the end of the period. The P&LA prepared for the (end of the) period leads to convergence of estimation (assessment, or evaluation) of earned profit or recurred loss during the period. This evaluation is useful for all interested parties - management, lenders, investors, proprietors/partners/shareholders, tax authorities and employees. Remedial measures, if called for, can also be triggered. 

Depicting (or Unveiling) the Financial Position 

Accounting maintains proper records of various assets and thereby enables management to exercise proper (and productive) control over them. The operating results for a particular period and the financial position on a particular date can be known. The BS (or position statement) tabulates, with clarity, the assets, liabilities, owners' capital, etc. - reflecting the true position of these vital parameters of the business; assets exceeding liabilities point to solvency of the firm; otherwise, the insolvency.