• Accounting can be defined as systematically recording, reporting, and storing all the business’s financial information.
• The purpose of an organization’s accounting department is to keep track of financial transactions.

The Objectives of Accounting

1. Record Keeping: An organization’s accounting section’s primary responsibility is to record all financial transactions systematically. A proper level of analysis to arrive at an organization’s financial health will be ensured by systematic record-keeping. In addition, this will aid in methodical and precise decision-making.
2. Analyzing and determining financial outcomes: The accounts department prepares the organization’s profit and loss details based on the income statement prepared using the records it has retained for the period. Thus, it is a continuous process that continues regardless of the time frames set.
3. Analysis of the financial state of affairs: Accounting aims at determining the state of the organization’s financial affairs. Debts, liabilities, property, and assets will all be included. Continuously, the accounts section should offer current information on the company’s financial situation. This is best accomplished through balance sheet preparation.
4. Decision Making: Accounting has a broader goal of assisting managers and business owners in making decisions. Systematic accounting will be critical in making corporate decisions and setting realistic aims and strategies for future growth, such as product pricing to maximize profits.
5. Liquidity Status: Proper accounting should assist managers, and business owners determine how much cash and other resources they have available to pay for whatever financial obligations they may have. Liquidity knowledge will also help calculate the working capital and the capital utilized to pay off liabilities.
6. Securing the organization’s position: One of the accounting’s primary goals should be to assist with the organization’s positioning. Accounting provides you with a variety of financial statements to assist you in achieving this goal. The financial situation of a company, for example, will ideally go a long way in boosting the company’s financial status. The organization’s entire balance sheet, displaying cumulative profit or loss, and so on.
7. Accountability: Improving the firm’s responsibility to its fullest extent is one of the most important goals that accounting can achieve. The company’s accounting department is responsible for providing a solid foundation for evaluating the company’s actual performance over time. The accounting department’s financial disclosures can also help instill confidence in shareholders. Financial credibility and accountability can assist you in obtaining funding, whether through loans or investors.
8. Legal Objectives: Accounting has been made a legal obligation in many countries due to legislation. Every business is required by law to manage and preserve a financial record of transactions for specific periods and to share this information with shareholders, promoters, and regulatory bodies. Furthermore, proper accounting may assist you as an organization in determining the correct financial rights, obligations, and liabilities beneficially.
9. Fraud detection and prevention: If the records are correct and authentic, you may rest assured that no company employee will be able to engage in any unethical financial activity. Accounting will add much-needed transparency to the firm’s transactions as a whole, ensuring that fraud is almost eliminated.