Question

discuss the role of accounting in business

Answer 1

Accounting is concerned with systematic and chronological recording of transactions.It takes into account only quantitative transaction leaving all the events.Following are the roles of accounting in the business:

1.HELPS IN FINDING FINANCIAL RESULT:-Accounting prepare financial statements which includes Income Statement,Balance Sheet and Cash Flow Statement.Income statement shows financial result i.e. Net profit for the period.Balance sheet present financial position at the end of the year.Cash flow statement shows the cash inflows and outflows i.e.the direction of cash.

2.ENSURE STATUTORY REQUIREMENT:-Accounting ensures different statutory requiremnts by providing various provison,disclosing facts as per relevant law and regulation.Accounting ensures cmopliance of relevant idustry regulatory laws and regulations.It also ensures compliance of relevant accounting standards and generally accepted accounting principles for true and fair presentation of business transactions.

3.HELPS STAKEHOLDERS:-Accounting helps various stakeholders in making decision about how much to be invested and other related concerns.It helps creditors to understand creditworthiness of the business,helps investors to understand the profitability and financial position of the business.

4.HELPS THE MANAGEMENT:-Accounting helps the management to take decission about expansion,growth or stability by understanding the fianancial attractiveness of the business.

5.HELPS IN FILLING FINANCIAL STATEMENTS:-Accounting helps in filling financial statements by preparing financial statements.