-Harsha Lal- ACW Accounts at Edumarz
Answer- In earlier times accounting was basically concerned with recording the financial transactions (I.e. record keeping activity), but, now-a-days, the role of accounting has changed due to the increased economic development and higher societal demands. It measures, classified and summarizes huge data and interprets those data into certain reports and statements. This data then reflects the financial position and results of operations of that firm. Therefore, accounting is regarded as the language of business. It also performs as a service activity since it collects the quantitative information from the firm and delivers it to its various users.
It is a substitute for memory- No human being can remember all the transactions which take place in the day-to-day business of a firm. So here the accounting helps by recording all the transactions in the various books.
Assistance to management- Management uses the accounting information for making short and long term business decisions. The records even help the management to control costs and work according to the estimated budgets.
Comparative study- It makes comparison possible of profits of the current year with that of previous years both intra and inter firms. This helps to measure the performance level of a firm for a period of time.
Evidence in court- It acts as a proof for all the recorded transactions , which can be shown in the court as evidence, in case any issue arises.