Accounting objectives, Financial Accounting

Accounting objectives

Accounting has two main objectives:

  • To assist control over the assets and liabilities, and the income and expenditure of the enterprise; and
  • To ascertain the profit or loss of the enterprise, the main sources of income and expenditure contributing to this profit or loss and the assets and liabilities that represent the profit or loss.

 

If the owners of an enterprise want it to earn more profit, they must increase the volume of turnover. As turnover increases, the enterprise must expand physically; as it expands, it will create departments, which deal with different lines of sales or services; there is a limit to the physical expansion at a single site–and the market there is also limited. Hence, enterprises set up branches, so that expansion can be continued. The need then arises to control the assets, liabilities, income and expenditure of the different departments and/or branches.

Posted Date: 12/12/2012 1:01:00 AM | Location : United States







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