Functions of Accounting

The main functions of accounting are as follows:

• Measurement: Accounting measures past performance of the business entity and depicts its current financial position.
• Forecasting: Accounting helps in forecasting future performance and financial position of the enterprise using past data.
• Decision-making: Accounting provides relevant information to the users of accounts to aid rational decision-making.
• Comparison & Evaluation: Accounting assesses performance achieved in relation to targets and discloses information regarding accounting policies and contingent liabilities which play an important role in predicting, comparing and evaluating the financial results.
• Control: Accounting also identifies weaknesses of the operational system and provides feedbacks regarding effectiveness of measures adopted to check such weaknesses.
• Government Regulation and Taxation: Accounting provides necessary information to the government to exercise control on the entity as well as in collection of tax revenues.