Functions of Accounting in Communicating Information - QS Study
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Functions of Accounting in communicating information

In order to complete its major purpose of communicating information to the users, accounting embraces the following functions.

Identifying: Identifying the trade transactions from the basis documents.

Recording: The subsequently purpose of accounting is to maintain a methodical record of all trade transactions, which are recognized in an arranged method, soon after their incidence in the journal or subordinate books.

Classifying: This is apprehensive with the categorization of the recorded trade transactions so as to assembly the transactions of comparable kind at one place; i.e., in ledger accounts. In order to confirm the mathematical accurateness of the accounts, trial balance is organized.

Summarizing: The confidential information obtainable from the trial balance is used to arrange profit and loss account and balance sheet in a way useful to the users of accounting information.

Analyzing: It establishes the connection between the items of the earnings and loss account and the balance sheet. The reason of analyzing is to recognize the economic power and limitation of the business.

Interpreting: It is apprehensive with elucidation the significance and implication of the connection so established by the analysis. Interpretation should be helpful to the users, so as to permit them to get accurate decisions.

Communicating: The consequences obtained from the summarized, analyzed and interpreted information are communicated to the concerned parties.