Discuss Functions, characteristics, Advantages and Limitation of accounting

Function of Accounting:

1.      Maintain the record: maintaining proper record of all the business transaction.

2.      Protection of business properties

3.      Legal requirements

4.      Communication of results

Q: what are the characteristics of modern accounting?

1.      Accounting involves recording of financial activities which accompany the complexity and uncertainty of business.

2.      Accounting systems are prepared on cash basis or accrual basis of accounting

3.      Accounting is historical in nature.

Q: State the advantages and limitation of accounting?

Advantages of Accounting:                   

1.      It provides information useful for making economic decisions.

2.      It provides information useful to investors and creditors for predicting, comparing and evaluating

3.      It provides information useful in judging the management’s ability to utilize enterprise resources effectively.

4.      It provides factual and interpretative information about transactions and other events which are useful for prediction, comparing and evaluating the business earning power.

Limitations of Accounting:  

1.      Financial accounting is of historical nature

2.      Financial accounting deal with overall profitability

3.      Absence of full disclosure of facts

4.      Financial statements are affected from personal judgment