Advantages of financial accounting notes

#Advantages of financial accounting notes free

To maintain systematic records of business. It also includes classifying, summarizing, analysing and also communicating the results to users. It is concerned only with recording of monetary transactions. Differences between the two are as follows. Its main purpose is record keeping or maintenance of books of accounts, It should not be confused with accounting. Only those transactions which bear a monetary value are recorded. It is affected by window dressing which means manipulation of accounts so that financial statements describe a more favourable position than the actual position.ДЇinancial accounts are unsuitable for forecasting because they are only records of past events.Д«ook keeping is an art of recording the transactions in the books of accounts.

#Advantages of financial accounting notes free

It is influenced by personal judgements and not free from personal bias which affects its credibility. It considers only historical transactions and the figures given in the financial statement do not consider price level changes. Non monetary aspects like quality, honesty, skills are ignored in accounting. One of the major limitations of accounting is that it considers only monetary transactions. with that of previous years and helps businessmen to make decisions.ДЄccounting forms a basis in the process of performance evaluation to improve the performance of employees, divisions,activities, etc.ДЄccounting records act as an approved evidence in legal matters. who perform an in depth analysis as per the requirement of the stakeholders.ДЄccounting provides permanent records for all business transactions and provides reliable information to various parties.ДЄccounting provides the Profit and loss of a business for a given period of time.ДЄccounting provides the facility of comparative study of the various aspects of business like profit sales, purchase,etc. To provide accounting information to various interested parties like owners, creditors, banks, employees etc. To ascertain the progress of business from year to year and to detect errors and frauds. To ascertain the financial position of business by means of financial statement i.e,Balance sheet. To ascertain the net profit or loss suffered on account of business transactions during a particular period and to know the exact reasons leading to profit or loss. To maintain proper records of business transactions according to specified rules which helps them to minimize the chance of omission and fraud. Trial balance.Д¬ommunicating: Accounting also includes the communication of financial data like financial statements to the users who analyse them as per individual requirements. Summarising : It is the process of putting the balances of all accounts at one place i.e. Classification refers to the grouping of all the transactions of same nature at one place. It involves recording them in a journal and keeping a systematic record of all of them.Д¬lassifying: After recording the transactions they are classified. Recording : Only those transactions are recorded in books of accounts which can be measured in terms of money. Identifying : Identifying the business transactions from various sources is the first step of involves observing all business activities and identifying those which are considered as financial transactions. Accounting is an art of recording, classifying and summarizing the monetary transactions in an efficient manner and interpreting the results.