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The following are the main functions of Accounting:
1. Record Keeping: Accounting is to maintain systematic and chronological record of financial transactions and to post them subsequently to the various Ledger Accounts and finally to prepare the Final Accounts to find out the profit or loss of the business at the end of the Accounting Period.
2. Protecting of Properties: Accounting is to calculate the correct amount of Depreciation on Assets by choosing the appropriate Method applicable to any particular assets. Any unauthorized dissipation of any asset will bring the business to the threshold of insolvency. Accounting is to design a desirable system to protect the properties and assets of the business from unauthorized and unwarranted use.
3. Communication of Results: Accounting is always to communicate the results of the recorded and transactions to the different parties who are interested in the particular business, i.e., properties, investors, creditors, employees, Govt. official and researchers etc.
4. Meeting Legal Requirements: Accounting is to devise and develop such a system of keeping record and reporting the results as will always meet and legal requirements to enable the proprietor or the authority to file various statements like Income-Tax Returns, Sales-Tax Returns etc.
Hence, Functions can be sharply divided into two distinct departments:
A. Historical Function: This part relates to the past transactions of the business firm, Accounting records, classifies, reports, analyses and interprets the transactions already effected. Accounting also calculates the profit or loss made during the year and prepares other financial statements and the statement of Assets and Liabilities or the Balance Sheet and reports and results to the proprietors, managers and other interested parties.
B. Managerial Function: Accounting is to render such service to the management as to aid different levels of the managerial staff to carry out the operations of the business efficiently.
Or
Accounting is an advisory service function and is concerned with furnishing such information to the management as will facilitate efficient planning, operational control and coordination of future activities of the enterprise. Thus, Accounting is to "assist management in establishing a plan for reasonable economic objectives and in making of rational decisions"-Haynes and Massic, Management Analysis So we see that Accounting helps in Budgetary Control, Cost Control, Material Control and Operational Control and also in minimizing wastage, losses and errors and frauds
The most important function of Accounting are:
1. Accuracy: Followed correct accounting principles while booking the revenues, expenses and projects.
2. Completeness: Ensure that all the accounting entries are covered while presenting the financial statements.
3. True and fair presentation of Balance sheet and Profit and Loss account and without errors or mis appropriation or mis presentation.
4. Reconciliation and notification: If there is any changes in accounting practise during the year vis a vis to previous year should be identified and notified to all stakeholders.
5. Cost control and business development: Identify the scope of cost savings and suggest management to enhance the areas of further business development.
