Following are
some of the most important objects of
accounting:
- Financial
Information:
Financial information is necessary in order to
run a business in an efficient manner. Reliable
information will be available only through
keeping proper books of accounts.
- Borrowings
from Money Lenders:
Proper accounting is essential, if money is to
be borrowed for the purpose of
business. The
lender will only agree to lend money when he is
satisfied as to the solvency of the borrower.
Information available from books of accounts is
the means of measuring such solvency.
-
Verification of Cash:
Cash in hand can be verified and any
defalcation can be detected, if proper
books of
accounts are maintained.
- Payment of
Tax:
Payment of sales tax and
income tax is only
possible if books of accounts are maintained.
- Dispute
Settlement:
In case of any dispute, books of accounts can be
produced in the court of law as a documentary
evidence.
- Government
Requirements and Policies:
Government fixes up fair
prices, formulates
industrial policy, prepares economic plans,
decides import-export quotas and does many other
functions on the basis of accounting information
available from books of accounts.
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