Objectives and Scope of Accounting

 To keep systematic records: Accounting is done to keep systematic
record of financial transactions. The primary objective of accounting is to
help us collect financial data and to record it systematically to derive correct
and useful results of financial statements.

	To ascertain profitability: With the help of accounting, we can evaluate the profits and losses incurred during a specific accounting period. With the

help of a Trading and Profit & Loss Account, we can easily determine the
profit or loss of a firm. To ascertain the financial position of the business: A balance sheet
or a statement of affairs indicates the financial position of a company as on
a particular date. A properly drawn balance sheet gives us an indication of
the class and value of assets, the nature and value of liability, and also the
capital position of the firm. With the help of that, we can easily ascertain
the soundness of any business entity. To assist in decision-making: To take decisions for the future, one
requires accurate financial statements. One of the main objectives of
accounting is to take right decisions at right time. Thus, accounting gives
you the platform to plan for the future with the help of past records. To fulfill compliance of Law: Business entities such as companies, trusts,
and societies are being run and governed according to different legislative
acts. Similarly, different taxation laws (direct indirect tax) are also
applicable to every business house. Everyone has to keep and maintain
different types of accounts and records as prescribed by corresponding laws
of the land. Accounting helps in running a business in compliance with the
law.