Hi, Today we will talk about the Objective of Accounting System Advantage + Limitation. So, we discuss about the concepts that are needed in order to know about accounting. If you have any query than you can leave the comment.
Definition of Accounting
- The art of recording , classifying and also reporting the financial data of an organization
- The art of collecting, processing, analyzing, interpreting as well as projecting of financial information
- The principles of practice of systematically recording presenting and interpreting financial accounts
- Accounting can also be defined as the process of identifying, measuring and communicating economic information to permit informed judgement and decisions by users of information.
Objective of Accounting System Advantage + Limitation
Moreover accounting may not require knowledge of mathematics but you need to be able to add subtract, multiply as well as divide things you need to be able to do in your daily life. Otherwise, you would not know how much money you had with you or how much you would have. If you spent some of it, or whether the change you received was carried. So let’s remove one big misconception some people have concerning accounting. These misconception include to be a good at arithmetic to be good at accounting, through you will find it easier to do something if you are. For more info, click here
Objectives of Accounting:
- If they are making a profit or a loss.
- what their business is worth?
- what a transition was worth to them?
- how much worth they have?
- how much owe to someone else?
- Accounting help in knowing profit.
- It also help to know financial position of organization.
- It help to know the lost of creditors.
- Provides assistance to management.
- Helpful in settlement of accounts.
- Accounting records depend on the past happening.
- Accounting record is not fully exact.
- It ignores the qualitative elements.
- It ignores the effects of varying price level.
- Accounting may leads to windows dressing
System of accounting:
There are 2 systems:
- Cash system of accounting
- Accrual system of accounting
Cash System of Accounting
It is a system where accounting entries are make whenever cash receives or paid.
Accrual system of accounting
It is a system in which accounting entries are made on the basis of amount having become due for payment or receipt.