Scope

Question 1

1. Business Forecasting
   .

Answer 1

Predict future business levels using past and present data.

Aids in planning strategies like expansion and diversification.

Question 2

2. Proper Decision Making

Answer 2

Helps in decisions like pricing, salary hikes, investments, and bonuses.

Accurate accounting avoids poor financial decisions.

Question 3

3. Correct Taxation

Answer 3

Ensures compliance with tax obligations (e.g., service tax, customs duty).

Tax calculated based on financial records.

Question 4

4. Replacing Memory

Answer 4

Financial records handle complex transactions.

No need to memorize each transaction—records are stored systematically

Question 5

5. Analyzing Performance

Answer 5

Maintains accurate transaction records.

Assists in evaluating business performance over time ( income, expenses, p and l )

Question 6

6. Analyzing Financial Status

Answer 6

Financial statements (P&L, Balance Sheet) reflect the financial position.

Shows profits, losses, assets, and liabilities.

Question 7

7. Documentary Evidence

Answer 7

Accounting records act as legal documents.

Used in court as proof for business claims.

Question 8

8. Helping in Realisation of Debts

Answer 8

Maintains personal accounts of debtors and creditors.

Reveals exact amounts owed and payable.