Need for accounting

• Need for accounting

The main aim of a business is to earn profit. The main purpose of accounting is to ascertain profit or loss during a specified period, to show financial position of the business on a particular date and to have control over the firm's property.

Thus accounting can be described as a discipline which records classifies, summarizes and interprets financial information about the activities of a concern so that intelligent decisions can be made about the concern.

• Accounting for communication

To understand accounting you must understand the language.

Most organizations and individuals use accounting information. Therefore, it's important that the information is clear, accurate and standardized. Think of a list of people who would depend upon accounting records and reports, and then compare your list with the one below.

• CEOs
• Investors
• Managers
• Employees
• Franchise
• Bank Officers
• Stake Holders
• Entrepreneurs
• Financial Brokers
• Government Tax Agents

Since many people rely on financial information, accounting requires accuracy and standardization.