The role of accounting has changed over the amount of your time. In the modern world, the role of accounting is not only limited to record financial transactions but also to provide information to the management so that it can be used as a basic framework for decision making, providing relevant information to various users, and assist in both short-run and long-run planning. The role of accounting within the times is given below.
Provides assistance to management: Management uses accounting information for short-term and long-term planning of business activities, to predict the future conditions, prepare budgets and various control measures.
Helps within the comparative study: within the times, accounting information helps us to understand the performance of the business by comparing the present year’s profit thereupon of the previous years and also with other firms in the same industry.
Substitute of memory: In the modern world, every business involves a large number of transactions and it is beyond human capability to memorize each and every transaction. Hence, it’s necessary to record transactions within the books of
accounts.
Information to end-users:Â Accounting plays an important role in recording, summarising, and providing relevant and reliable information to its users, in the form of financial data that helps in decision making.
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What is Accounting?
Accounting, in simple terms, is the recording of various transactions, that took place during a particular period, in the books of accounts in a systematic and proper manner.
Basis of Accounting
After going through this lesson, you will get a detailed concept of the following Basis of Accounting. Cash and Accrual Basis of Accounting,
International Financial Reporting Standards (IFRS)
International Financial Reporting Standards are designed to serve as a common global language of business affairs so that accounts of various companies are understandable and comparable across international boundaries.