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Home Introduction to Accounting Objects of Accounting

Objects of Accounting:

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Following are some of the most important objects of accounting:
  1. 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.

  2. 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.

  3. Verification of Cash:

    Cash in hand can be verified and any defalcation can be detected, if proper books of accounts are maintained.

  4. Payment of Tax:

    Payment of sales tax and income tax is only possible if books of accounts are maintained.

  5. Dispute Settlement:

    In case of any dispute, books of accounts can be produced in the court of law as a documentary evidence.

  6. 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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More study material from this topic:

Need and importance of accounting
Accounting as a business language
Bookkeeping versus accounting
Branches of accounting
Objects of accounting
Important accounting terms and concepts
Accounting principles
Accounting concepts
Accounting conventions
Questions and answers



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