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Functions of Accounting

  • Measurement: Accounting measures past performance and depicts its current financial position.
  • Forecasting: Accounting helps in forecasting future performance using past data.
  • Decision making: Accounting provides relevant information to the users for decision making.
  • Comparison and evaluation: Accounting helps in comparison and evaluation of business results. It assesses performance achieved in relation to targets and discloses information regarding accounting policies and contingent liabilities which helps in prediction, evaluation and comparison of the financial results.
  • Control: Accounting helps in identifying the weaker areas of the business operation and provides feedback regarding effectiveness of measures adopted to check such weakness.
  • Government regulation and taxation: Accounting provides necessary information to the government to exercise control on the entity as well as in collection of tax revenues

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