OBJECTIVES OF ACCOUNTING

• Financial information is necessary in order to run a business  in an efficient manner. Reliable information will be available only through keeping proper books  of accounts.
• Proper accounting is essential, if money is to be borrowed  for the purpose of business.The lender will only agree to lend money when he is satisfied as to the solvency of the borrower. Information available from books of accounts is the means of measuring such solvency.
  
• Cash in hand can be verified and any defalcation can be detected, if proper books of accounts are maintained.
• Payment of sales tax and  income tax is only possible if books of accounts are maintained.
• In case of any dispute, books of account can be produced in the court of law as a documentary evidence.
• Govt. fixes up fair prices, formulates industrial policy, prepares economic plans, decides import-export quotas and does many other function on the basis of accounting information available from books of acounts.

IMPORTANCE OF ACCOUNTING

TERMS AND CONCEPTS

• BUSINESS ENTITY:
  

                                        Profit making organization are known as business.There are three  main types of business; those selling services; those selling goods; those manufactring   goods. 

A business entity is an economic unit which enters into business transaction that must be recorded, summarised  and reported. The entity is regarded as separate its owner or owners; the entity owns its own property and has its own debts. The purpose of accounting is to provide useful information about an organization to people who need such information but not about the personal affairs of the owner or owners.