The purpose of the accounting objectives business is to systematically report everything related to the analysis of transactions and prepare both the financial statements As the balance sheet and the Statement of income.
This type of information allows the adequate decision making financial and the fluidity in the procedures of the activities, transactions and commercial events that benefit the organization.
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In this article you will find:
Main objectives of accounting
Next, we will analyze how you can understand and achieve the objectives of accounting in a company:
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1. Identification and maintenance of the transaction log
The objective of the accounting processes of a company is to carry out systematic records of the different financial activities, maintaining them allows to ensure the optimization of analysis of the precise decision making and thus benefit the company financially.
2. Estimate of profit and loss statement
It is usually difficult accurately estimate the income statement of an organization, especially if accounting documents are not properly prepared and maintained, this could undermine the soundness of decision-making in the company.
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3. Balance Sheet Preparation
The good development of a company is easier to understand when it is based on the financial data provided by the accounting departments of the company in a correct balance sheet, which will help you to establish the proposed objectives.
4. Analysis of financial statements
This objective determines the state of the financial processes of the company, which includes the Passives, assets, debts and properties through updated and continuous information regarding the financial status of the organization.
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5. Facilitate decision making
An efficient accounting facilitates the company make good decisions where capital investments and high employee pay and incentives are involved.
6. Fraudulence detection and prevention
When fraud and financial mismanagement occur, the loss of the company may occur, in this sense one of the The main objectives of accounting is to prevent this from happening by recording the actual transactions of the company. herself.
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If the records are adequate, the company may have the assurance that no employee can commit fraud, since the accounting will facilitate the transparency necessary for the company to reduce any incident.
7. Keep the balance
So that a balance of cash inflows and outflows, the accounting has to be correct in maintaining the financial accounts of the organization.
8. Error prevention
Organizations seek to maintain financial records systematic, where appropriate trials and errors are carried out and thereby correct any errors that may be made in the future in the accounting books.
9. Achieve to secure the position of the company
This is one of the accounting objectives more important, since the accounting work provides extensive information on the financial statements that it allows to achieve the objective of the organization.
10. Liquidity statement
Have a complete knowledge of the state of liquidity is a benefit to the company, this will help business managers to know withhow much money and resources they count to make payments of your financial commitments and will be of great use to make calculations of the capital that is used to pay the liabilities.
Improper accounting could lead to inefficient corporate financial management and lead to serious problems causing the organization to close down.
11. Actual financial statement
In order to obtain a correct compensation of the financial status and the good position of the organization, it is essential to have an audit that helps the company to know if it is conducted in the correct address.
12. Cost and asset audit
The correct audit of costs and goods is carried out by means of the objectives of business accounting in order to estimate the benefits that will generate high profits for the organization.
You can check more about Financial Audit here.
13. Management, social and tax audit
Another objective of accounting is to carry out management, social and tax audits. This is due to the difficulty that companies present to carry out commercial operations, without having to use the organization's accounting books.
The objectives and importance of accounting, are based on the maintenance of the records of all the transactions in a constant and systematic way of the company and in turn maintain and evaluate them to make solid decisions and achieve growth that benefits the business. To see related topics, we invite you to see our website.
Sources and references:
- Bhasin H. (2019, February) What are the Objectives Of Accounting?
Dagab Kirti (2019) 10 Most Important Objectives of Accounting?
