The main object of Accounting is to record financial transaction
systematically in the books of accounts and to find out profit-loss and
financial position of a business. Ascertainment of profit-loss and
financial position, interpretation and analysis of accounts and
statements, development of accounting system, collection of statistical
and economic data, formulation of financial principles and financial
planning and controlling result as per plan etc. are the main function
of accounting. In the modern age accounting is directly related with
financial management. The function of management are planning,
organizing, collecting business elements, motivating, coordinating and
budgeting etc.
Accounting helps the management in the following ways:
(1)Planning: Proper planning is very much needed for successful
completion of various management activities. These planning – cash
planning, sales planning, procurement planning, determining quantity of
stock, development of planning, fixing up target – profit et are very
much dependent on accounting data and information.
(2)Organization: Accounting plays a very vital role in proper
execution of the important function of management-organization.
Accounting helps management-organization by providing information like
percentage of profit over capital, capital investment position,
management efficie3ncy in controlling etc.
(3)Motivation: Labor-employees are to be motivated for achieving
expected performance. Financial help is one of the main motivating
factors of work. The management is to be aware of financial position of
the business for providing financial benefits. Accounting helps the
management by providing necessary information for taking proper
decision.
(4)Co-ordination: One of the main function of the management is
to achieve the final
target of the business by coordinating various
activities of different departments. Accounting helps in coordinating
various activities of different department of the business.
(5)Control: The main function of the modern management are
planning and controlling. Controlling is essential for completion of
activities according to plan. Accounting can help management much in
controlling.
(6)Preparation of final accounts: The management’s responsibility
is to communicate operating results for a certain period and financial
position of a business concern to the owners and parties concerned.
(7)Media of communication: Accounting plays a vital role as a
media in communicating various information of different departments,
business and management plan of action to various departments.
(8)Budgeting: Preparation of various budgets is essential to run
the business successfully. The historical information which is needed in
preparation of budget is supplied by accounting.
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