Purpose Of Accounting

Question 1

What are the 5 main purposes of Accounting ?

Answer 1

-Recording Transactions ,
-Management of business ,
-Compliance ,
-Measuring performance ,
-Control ,

Question 2

Purpose of Accounting - Recording transactions ?

Answer 2

-Accountants record all of the money coming and going out of the business . This enables them to keep track of payments received and ensure bills and taxes are paid on time

Question 3

Purpose of accounting - Management of business ?

Answer 3

The manager of a business is responsible for ;
-planning - to foresee likely financial commitments
-Monitoring - to check performance and spending
-Controlling - to ensure sufficient funds are available to cover outgoings

Question 4

Purpose of Accounting - Compliance ?

Answer 4

-All businesses have a responsibility to comply with financial reporting requirements in accordance with laws and regulations
-Internal accounting control help to combat fraud

Question 5

Purpose of Accounting - Measuring performance ?

Answer 5

Accountants measure how well the business is performing financial through its ;
-gross and net profit ,
-sales revenue ,
-efficiency in collecting money owed to a business
-Expenditure ,
-Costs .

Question 6

Purpose of Accounting - Control ?

Answer 6

Accounting also tracks ;
-Trade receivables - money owed to the business from sales of products and services
-Trade payables - Money owed by the business from debts that have been creates as result of purchasing products or services from other businesses