We are studying the functions of accounting because when you will go to interview for the post of accountant, anyone can ask the question. "What are the main functions of accounting or accounting department?" At that time, you can give following points in the form of reply of your answer.
1. To Make Methodical Record
It is the function of accounting or accounting department to make methodical record. When we talk about methodical, it means there should a specific system in each task. In accounting, there is the method passing journal entries, there is method of posting, there is the method making financial statement. All the accounting work is completed automatically after passing systematical journal entries in accounting software, but to know the manual accounting is also important.
2. To Inform the Financial Results to Interested Parties
One of important function which is preformed by accounting is to inform the financial results to interested parties. By this, interested parties can know the exact amount of net profit or net loss, assets and liabilities of organisation. On this basis, they can take decision for future relation with organisation.
3. Safeguard the Assets of Organisation
Through accounting, accounting department safeguards the main assets of organisation. Accounting department's treasury officer can track the current balance of cash by verifying physical quantity of currency with book value, if there is the difference, investigations of cheaters will start. There may be mistake, so it is also corrected by auditing. Except cash, accountant can track the physical quantity of inventories and compare with book value. If there is any difference, investigation of loss of inventory will start for safeguarding future loss.
4. To Help to Management
It is the duty of manager to make plan, to organize and to control. For doing all these function, manager has to take help from accounting department. Accounting department provides timely information for helping management department. Sometime, accounting department provides more advance information by analysis financial statement, this information is more useful for fast decision which will be taken by management department.
5. Function of Trustee
Today, accounting department has become the great trustee of organisation. After coming of ERP software, accounting department has connected with all other departments. Now, to record and to provide information has become so easy. As good trustee, it works.
6. Fulfillment of Legal Requirements
Today, company has to follow lots of laws. For fulfillment the need of law, accounting department makes and publish financial statement as per the performa provided by company law. As per income tax law, it is also adjusted for calculating the taxable income. As per VAT law, all the purchase and sale entries are passed by including VAT. Time to time, service tax is recorded by accounting department. Now, accounting department will become more transparent in the front of all the laws.
Related : Need for Accounting
1. To Make Methodical Record
It is the function of accounting or accounting department to make methodical record. When we talk about methodical, it means there should a specific system in each task. In accounting, there is the method passing journal entries, there is method of posting, there is the method making financial statement. All the accounting work is completed automatically after passing systematical journal entries in accounting software, but to know the manual accounting is also important.
2. To Inform the Financial Results to Interested Parties
One of important function which is preformed by accounting is to inform the financial results to interested parties. By this, interested parties can know the exact amount of net profit or net loss, assets and liabilities of organisation. On this basis, they can take decision for future relation with organisation.
3. Safeguard the Assets of Organisation
Through accounting, accounting department safeguards the main assets of organisation. Accounting department's treasury officer can track the current balance of cash by verifying physical quantity of currency with book value, if there is the difference, investigations of cheaters will start. There may be mistake, so it is also corrected by auditing. Except cash, accountant can track the physical quantity of inventories and compare with book value. If there is any difference, investigation of loss of inventory will start for safeguarding future loss.
4. To Help to Management
It is the duty of manager to make plan, to organize and to control. For doing all these function, manager has to take help from accounting department. Accounting department provides timely information for helping management department. Sometime, accounting department provides more advance information by analysis financial statement, this information is more useful for fast decision which will be taken by management department.
5. Function of Trustee
Today, accounting department has become the great trustee of organisation. After coming of ERP software, accounting department has connected with all other departments. Now, to record and to provide information has become so easy. As good trustee, it works.
6. Fulfillment of Legal Requirements
Today, company has to follow lots of laws. For fulfillment the need of law, accounting department makes and publish financial statement as per the performa provided by company law. As per income tax law, it is also adjusted for calculating the taxable income. As per VAT law, all the purchase and sale entries are passed by including VAT. Time to time, service tax is recorded by accounting department. Now, accounting department will become more transparent in the front of all the laws.
Related : Need for Accounting
How is accounting performing the function of trusteeship of org. Explain ?
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