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Accounts

Ananya Sharma
Ananya Sharma

Accounting provides essential financial information to internal and external users of a business. Internally, owners, management, and employees use accounting information to evaluate profitability, make decisions, and assess compensation. Externally, creditors, investors, tax authorities, and researchers use financial statements for lending decisions, evaluating investment risk, ensuring tax compliance, and analyzing industries. Maintaining accurate accounting records using a double-entry system allows a business to determine profit or loss, assess its financial position, and meet legal reporting requirements.

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Accounts
Accounts
Record of FinancialTransactions and Events Determine Profit or Loss Determine Financial Position Assisting the management CommunicatingAccounting Information to Users Protecting BusinessAssets
Functions of Accounting Preparation of Financial Statements Meeting Legal Requirements Communicating the Financial Data Assistance to Management Maintaining Systematic Accounting Records
Financial Information about Business Assistance to Management Replaces Memory Facilitates Comparative Study Facilitates Settlement ofTax Liabilities Facilitates Loans Evidence in Court Facilitates Sale of Business Helps in Decision Making
Accounts
INTERNAL USERS: Internal users are those individuals or groups who are within the organisation like owners, management, employees and trade unions. EXTERNAL USERS: External users are those individuals or groups who are outside the organisation like creditors, investors, banks and other lending institutions, present and potential investors, Government, tax authorities, regulatory agencies and researchers.
Internal Users Need for Information i. Owners ii. Management iii. Employees and Workers To know the profitability and financial soundness of the business. To take prompt decisions to manage the business efficiently. To form judgement about the earning capacity of the business since their remuneration and bonus depend on it.
External Users Need for Information i. Creditors, banks and other ii. Present investors iii. Potential investors iv. Government and Tax v. Regulatory agencies vi. Researchers To determine whether the principal and lending institutions the interest thereof will be paid in when due. To know the position, progress and prosperity of the business in order to ensure the safety of their investment. To decide whether to invest in the business or not. To know the earnings in order to assess authorities the tax liabilities of the business. To evaluate the business operation under the regulatory legislation. To use in their research work.
SYSTEMS OF ACCOUNTING Double Entry System Single Entry System It is a system ofAccounting under which both, Debit and Credit, aspects of Accounting are recorded. The Double Entry System has proved to be a scientific and complete system of Accounting. In this system, all transactions are not recorded on double entry basis. It is an incomplete Double Entry System.The accounts maintained under this system are incomplete and, therefore, not reliable.
Accounts

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Accounts

  • 3. Record of FinancialTransactions and Events Determine Profit or Loss Determine Financial Position Assisting the management CommunicatingAccounting Information to Users Protecting BusinessAssets
  • 4. Functions of Accounting Preparation of Financial Statements Meeting Legal Requirements Communicating the Financial Data Assistance to Management Maintaining Systematic Accounting Records
  • 5. Financial Information about Business Assistance to Management Replaces Memory Facilitates Comparative Study Facilitates Settlement ofTax Liabilities Facilitates Loans Evidence in Court Facilitates Sale of Business Helps in Decision Making
  • 7. INTERNAL USERS: Internal users are those individuals or groups who are within the organisation like owners, management, employees and trade unions. EXTERNAL USERS: External users are those individuals or groups who are outside the organisation like creditors, investors, banks and other lending institutions, present and potential investors, Government, tax authorities, regulatory agencies and researchers.
  • 8. Internal Users Need for Information i. Owners ii. Management iii. Employees and Workers To know the profitability and financial soundness of the business. To take prompt decisions to manage the business efficiently. To form judgement about the earning capacity of the business since their remuneration and bonus depend on it.
  • 9. External Users Need for Information i. Creditors, banks and other ii. Present investors iii. Potential investors iv. Government and Tax v. Regulatory agencies vi. Researchers To determine whether the principal and lending institutions the interest thereof will be paid in when due. To know the position, progress and prosperity of the business in order to ensure the safety of their investment. To decide whether to invest in the business or not. To know the earnings in order to assess authorities the tax liabilities of the business. To evaluate the business operation under the regulatory legislation. To use in their research work.
  • 10. SYSTEMS OF ACCOUNTING Double Entry System Single Entry System It is a system ofAccounting under which both, Debit and Credit, aspects of Accounting are recorded. The Double Entry System has proved to be a scientific and complete system of Accounting. In this system, all transactions are not recorded on double entry basis. It is an incomplete Double Entry System.The accounts maintained under this system are incomplete and, therefore, not reliable.