cannot accurately remember the numerous amount of varied transactions

cannot accurately remember the numerous amount of varied transactions such as purchases, sales, receipts, payments, etc. that takes place in business everyday. Hence, a proper and complete records of all business transactions are kept regularly. Moreover, the recorded information enables verifiability and acts as an evidence.

The owners of business are keen to have an idea about the net results of their business operations periodically, i.e. whether the business has earned profits or incurred losses. Thus, another objective of accounting is to ascertain the profit earned or loss sustained by a business during an accounting period which can be easily workout with help of record of incomes and expenses relating to the business by preparing a profit or loss account for the period. Profit represents excess of revenue (income), over expenses.

If the total revenue of a given period is Rs , , and total expenses are Rs. , , the profit will be equal to Rs. , (Rs. , , – Rs.

, , ). If however, the total expenses exceed the total revenue, the difference reflects the loss. Accounting also aims at ascertaining the financial position of the business concern in the form of its assets and liabilities at the end of every accounting