WHAT IS MEANING AND PURPOSE OF ACCOUNTING ?
Accounting in simplest terms, is recording of Financial Transactions of business according to Accounting Standards laid out by AICPA. It helps to:
a)To understand Profit or Loss resulting from business activity for any period
b) To know financial status of business by showing its Assets, Liabilities and Owner’s Equity on any day.
This provides you accurate and detailed data;
a) To get analytical reports to manage and control business to improve profits
b) To prepare accurate tax returns for IRS
c) To maintain permanent classified record of details for all income and expenses
d) To get accurate statements of your customers for timely collections
e) To get accurate statements of suppliers to make payments at right time
f) To present right financial statements for getting finance from banks/partners
g) To assure compliance of various taxing and regulating agencies by filing required reports/returns like returns for sales tax , franchise tax, payroll etc.
h) To work out valuation of business for buying or selling business any time
