Primary objective is to maintain a systematic and up-to-date record of all financial transactions.
Involves identifying transactions of financial nature, measuring them in terms of money, recording them in books of accounts, and classifying them under appropriate heads.
Calculation of Profit and Loss
To ascertain the net results of day-to-day transactions during a specific period of time.
For this purpose, an income statement or profit and loss account is prepared.
Depiction of Financial Position
A business wants to know its financial position at the end of a particular period.
A balance sheet is prepared, showing the assets, capital and liabilities of the firm
To make info available to various groups and users
To communicate the financial facts of the firm to various interested parties.
On the basis of such information, these users of accounting can take sound and realistic economic decisions.
