Accounting is a definite process of interlinked activities that begins with the identification of transactions and ends with the preparation of economic statements. Every step within the process of accounting generates information. Generation of data shouldn’t be an end in itself. It is a means to facilitate the dissemination of knowledge amongst varied teams of users. Such data enables the parties those that are interested to take appropriate decisions. Due to this fact, dissemination of data is among the essential function of accounting. To be useful, the accounting info ought to ensure to:
• Provide information for making economic decisions;
• Serve the users who depend on monetary statements as their principal supply of knowledge;
• Provide information helpful for evaluating and predicting the timing, amount and uncertainty of potential cash-flows;
• Provide data for judging management’s ability to utilise resources successfully in meeting goals; provide factual and interpretative information by disclosing undermendacity assumptions on issues topic to interpretation, analysis, prediction, or estimation; and
• Provide info on activities affecting the society.
The function of an accountant in producing accounting data is to screen, observe and recognise transactions and occasions to measure and process them, and thereby compile reports comprising accounting info which are communicated to the users. These are then interpreted, decoded and utilized by management and other consumer groups. It have to be ensured that the information provided is relevant, adequate and reliable for choice-making. The apparently divergent wants of internal and exterior users of accounting info have resulted within the development of sub-disciplines within the accounting discipline namely, monetary accounting, cost accounting and administration accounting. Monetary accounting assists for keeping a scientific file of monetary transactions the presentation and preparation of financial reports with a view to arrive at a measure of organizational success and monetary soundness.
It relates to the previous period, serves the stewardship function and is monetary in nature. It is primarily involved with the provision of economic data to all stakeholders. Price accounting assists in analyzing the revenue and expenditure for ascertaining the price of numerous products manufactured or services provided by the firm and fixation of costs thereof. It also helps to control the prices and providing crucial costing data to management for resolution-making. Management accounting offers with the provision of required accounting info to folks within the organisation to enable them in planning, determination-making, and controlling business operations.
Administration accounting draws the relevant data primarily from value accounting and financial accounting which helps the administration in budgeting, assessing profitability, taking pricing decisions, capital expenditure decisions and so on. Besides, it generates different info which relates to the longer term and is related for choice-making in the organisation. Such data consists of: cash flows, sales forecast, manpower wants, buy requirement, environmental data about effects on water, air, land, natural resources, flora, fauna, social responsibilities, human health, etc. Consequently, the scope of accounting has turn out to be so huge, that new areas like human resource accounting, social accounting, responsibility accounting have also gained prominence.
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