The basic aim of the accounting system is to provide information which the users need for making economic decisions. The user of the information can be a business enterprise, other business entities, non-trading companies or even individuals and families. The information can be as simple as a transaction or as complex as a financial statement.
What is the scope of the accounting?
In the broadest sense, the accounting function covers all processes that produce the financial statements – assets vs liabilities, profit & loss, and balance sheet. Other significant accounting functions include cost accounting, managerial accounting, and financial reporting.
Management accounting deals with the analysis of the company’s data and conveying it in an understandable form business tax accountant. This is useful in effective business planning and decision-making, ensuring the maximum profitability of resources. It also helps to identify weak areas of the company.
The scope of cost accounting is more specific, as it provides a detailed breakdown of the different costs associated with a product or service. This can be beneficial for businesses, as they can then make informed decisions about which products or services to offer based on cost.
The scope of financial accounting is to prepare reports that provide a clear view of the financial position of an entity. This is important for a wide range of stakeholders, including investors and lenders. It also helps to provide a basis for taxation decisions.
It is commonly used in government offices, courts and state owned organizations to calculate income-expenditure and ensure proper administration. Professionals like doctors, engineers, advocates/ lawyers and actors/ actresses also keep track of their income and expenses to file their income tax returns.