Top 10 Important Uses of Accounting

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Avoidance of the limitation of memorizing power
Today's Discussion
Compliance of Statutory provisions
Ascertainment of profit and loss of the business
Ascertainment of the financial position of the
business
Assessment of Tax
Knowledge of Debtors and Creditors
Determination of sale price of a business
Evidence in the court of law
Assistance in taking managerial decisions
Development of nation
Conclusion
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Avoidance of the limitation of memorizing power
Normally the accounting is used for business
purposes or for remembering the records easily.
To remember all the business transactions it is
very difficult to remember all the things for any
businessman. And we can say that it is impossible
to remember all the things for any businessman or
for any other people it is not possible to
remember things, it is because of the human
memory limitation. To record all the transactions
accounting is very helpful, whenever the
businessman wants to check the records, he can
check that records easily.
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Compliance of Statutory provisions
In the business, the recording of transactions is
a must from the accounting point of view. And all
the statutory provisions are fulfilled by the
help of the accounting. In simple language, we
can say that it is very important to make the
records of all the cash. And also in the
companies which are the joint-stock companies,
the purchase transaction, and the sale
transaction must be recorded.
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Ascertainment of profit and loss of the business
Any person who starts its business they want to
get or want to earn profit in their business.
Earning profit is the main purpose of any
business which is started. In any business, there
are two clear results in any business that is the
profit or loss. This is not fixed in any business
that there is every time profit or loss. But for
any business to get the correct business profit
or loss calculation, it is must to record
correctly by adopting the accounting principles.
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Ascertainment of the financial position of the
business
From the financial statement, at a specific date,
the knowledge of the assets of the company and
its liabilities are found by the company. And the
meaning of the assets is all the business sources
and the meaning of the liabilities is the payable
business amount. In any business, it is very
important to calculate the correct financial
position. Therefore it is a must for the
businessman that he should have all assets and
the liabilities records in accounting to get the
accurate calculation of the financial position.
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Assessment of Tax
Nowadays there are so many taxes which a
businessman has to pay. And the taxes which a
businessman has to pay are like income tax,
property tax, sale tax, import duty tax, excise
duty tax, customs duty tax, etc. If the
businessman makes accurately records its
production, sale, and income then the accurate
calculation is possible only. And it is a must
for the businessman to pay all these taxes
properly. But if the record is not made properly
by businessman then the officers which check the
records of the taxes of all businessman. And the
officer which checks the record of the taxes is
the assessing officer. Accessing officer
calculates the amount of tax with his own
estimation.
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Knowledge of Debtors and Creditors
Now the businessman, with the help of accounting,
can easily find all about the amount. Like all
the knowledge of debtors and creditors. From the
debtors what amount is pending can be easily
found by the businessman. And to creditors, how
much amount is paid can be easily found by the
businessman. All this possible, only if the
accounting records are maintained properly. So it
is so vital to make the records properly with the
help of accounting.
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Determination of sale price of a business
For determination of the sale price of a business
for selling the active business by the
businessman can be easily determined. Selling the
business to another party and the value of the
active business which the businessman wants to
sell can be easily found if the records are made
properly. If the business investments are records
properly by the businessman, then the sales price
of the active business determined easily.
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Evidence in the court of law
If in the future there are any arguments between
the two parties. So the court wants proof and
then the account records will work as proof. And
in front of the court, the accounts which are
recorded properly will work like proofs for the
court and the court accepts the account
transactions like evidence. So it is necessary
for the businessman to keep its records of the
accounts clear.
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Assistance in taking managerial decisions
To take the decision like the managerial decision
accounting is helpful for taking that type of
decision. And the decisions which are the
managerial decisions are like calculating the
goods and services price, calculating the product
mix and sale mix, decisions of the purchase, the
uses of plants differently, decisions of the
business continue or close, decisions of the
machinery replacement, for any specific order
decision regarding acceptance, and the tenders
regarding decisions, etc.
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Development of nation
For the development of a nation, accounting helps
a lot. Accounting can develop the nation like
when the businessman makes its records correctly.
When the businessman makes its records properly
then it means they cannot save the money which is
called black money. So it means they cannot steal
the tax which they have to give to the
government. If the businessman cannot steal the
tax then it means they have to give that tax to
the Government. And the Government can utilize
these taxes for the development of the nation. So
with the help of the taxes which are paid by the
businessman, the nations development is possible.
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Conclusion
Now you have seen all important uses of
accounting and now you are able to understand
mostly all about the main uses of accounting.
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