Accounting is one of the vital subjects in which students want to make their career. Moreover, it holds a wide scope in several fields, especially business. When you start a business, there are various things you have to study. One of them is accounting. Yes, to run and manage the business you must understand what accounting and accounting functions.
However, it is vital for one to know who wants to start a business. Because accounting helps in managing and analyzing a company’s financial resources. Moreover, understanding accounting and its functions help you to decide if you want to pursue a career in accounting or not.
Therefore, if you want to know and understand the Accounting Assignment Help and accounting functions. Keep scrolling. It will provide you with all the essential information regarding the same. So, here we go.
Accounting: An Overview
Accounting refers to the process of reporting, recording, analyzing, and summarizing economic data. It provides information on the financial health of a corporation. It helps the owners or different stakeholders of a company make successful choices and decision-making.
Moreover, it helps in organizing, collecting, analyzing, reporting, and understanding financial activities easily. Therefore, accounting is vital to a business’s success.
In addition, it is also vital to understand the functions of accounting. So, let’s discuss them.
List of Accounting Functions
The business can keep a history of financial data through the functions of the accounting department. The following are some of the basic accounting functions in an organization:
Maintaining Financial Records
Accounting supports businesses in keeping track of their day-to-day financial operations. For example, in purchases, product sales, receipts, and payments. Accountants keep these records in an accurate and up-to-date manner.
Monitoring Financial Transactions
Accountants track and record several financial activities connected to payments. Especially the payments that are due to the company and receipts earned by the firm. They ensure that the company receives revenue and remains profitable.
Creating Financial Reports
During the period of a business’s growth, the accountants prepare a variety of financial reports. This can be done once it has been fully audited.
Moreover, accounting includes creating detailed monthly, quarterly, and annual financial reports for internal and external stakeholders. Also, the statutory compliance on the company’s assets, debts owed, profits and losses, etc.
Due Payments Of Employees
Accounting helps in creating:
- Monthly Payroll Payments
- Handle employee benefits.
- Provide work-related bonuses or performance bonuses to employees.
Also, accounting helps in keeping track of:
- Employee Welfare Funds
- Mandatory PF
- Employee Provident Funds, etc.
Maintaining Digital Records
Accounting includes developing, maintaining, and upgrading digital accounting systems. They are saved digitally. Also, they help in keeping track of a company’s financial information.
Making Bill Payments
Accounting examines invoices to ensure that bills are properly expensed. Also, it sets payment dates and pays the bills that the company owes to various vendors and suppliers on a specific day.
Preparing Budget/Forecasts
To examine the company’s future profitability, the accounts department creates forecasts/budgets of the company’s financial data. For example, the company’s overall budget, departmental/internal budgets, and project budgets.
Making Financial Projections
Accounting functions include examining the company’s:
- Financial Resources
- Expected Revenues
- Future Expenses, etc.
Therefore, these functions help to forecast project viability, future business expansion, and growth.
Making Available Records For Auditing
An accountant’s role is to make all relevant financial documents available. So that the company’s auditor can conduct:
- Financial Audits
- Detect Accounting Errors
- Give the right solutions.
To Keep Up-To-Date Financial Resources
This function of accounting helps in assessing the organization’s financial strengths and weaknesses. Also, it develops solutions and strategies to overcome imperfections and increase strengths.
Review Of Performances
Moreover, accounting also conducts regular financial reviews. And it maintains some performance evaluation criteria for the company’s various departments. Therefore, this helps businesses to assess their performance. And reward those who meet the performance evaluation criteria. This function of accounting motivates employees. And it will result in the enhancement of productivity and cost savings.
Stick To All Legal And Statutory Requirements
However, to protect the entity from penalties for non-compliance. The accounting department ensures that the entity will stick to the following requirements.
- Statutory and Legal Compliances
- Industrial and Government Rules and Regulations
- Policies Related to Taxation
- Financial Reporting
- Employee Wage Compliances
You Must Also Know
Objectives Of Accounting
When you are learning the accounting functions, it is vital to understand the objectives of accounting. So, let’s start.
Keeping Systematic Record Of All Business Transactions
Accounting helps in keeping a systematic record of all financial transactions in an entity’s books of accounts. It is one of the primary accounting goals.
Calculating Profit and Loss & Analyzing The Results
Every company begins with the goal of making money. Therefore, profit is the heart of any company. Therefore, accountants create a statement or account called a “Profit & Loss Account or Statement of Profits & Losses”. It helps them to know if the business is profitable or not.
Estimating An Entity’s Financial Status
Accountants can calculate the exact financial status of a firm at any time. They can do it by calculating every asset and liability incurred by the entity. To check the value of assets and liabilities, they create a “Balance Sheet.”
Provide Financial Statements Information To Various Users
The company’s financial statement users play a critical role. The company’s financial statements affect the process of decision-making regarding financial statements by the users. They are also a part of the company’s future growth.
Moreover, one of the most essential goals of accounting is to provide information to various interested parties or stakeholders. This helps them in making sound financial decisions.
Provide Assistance To Management
Accounting helps management in effectively handling everyday business operations. It can be done by analyzing financial data. And also giving the insights in the form of reports.
Final Words
To sum up, we have discussed the different accounting functions in the above blog. We have also gone through the objectives of accounting. So, now you are aware of accounting and its various functions. Therefore, you can now decide if accounting is the best option for you or not. If you are interested in calculations and making budgets, this can be a good option for you. In the end, I hope this blog helps you in understanding the different functions of accounting.
