position of the business enterprises can be forecasted. (iii) Comparison Accounting helps to compare the actual performance with the planned performance. It is also possible to compare with the accounting policies. Through comparison of the actual financial results of the business enterprises with projected figures and standards, effective measures can be taken to enhance the efficiency of various operations.
(iv) Decision making Accounting provides relevant information to the management for planning, evaluation of performance and control. This will help them to take various decisions concerning cost, price, sales, level of activity, etc. Decision refers to choosing a desirable course of action from alternative courses of action. (v) Control As accounting works as a tool of control, the strengths and weaknesses are identified to provide feedback on various measures adopted.
It serves as a tool for evaluating compliance of business policies and programmes. Control refers to comparison of actual performances with planned performances, measure deviation and take corrective action. (vi) Assistance to government Government needs full information on the financial aspects of the business for various purposes such as taxation, grant of subsidy, etc. Accounting provides relevant information about the business to exercise government control on business enterprises.
Accountancy - . Importance of Accounting Accounting is a basic necessity for all enterprises. Importance of accounting is enumerated as below: (i) Systematic records All the transactions of an enterprise which are financial in nature are recorded in a systematic way in the books of accounts. The records are classified under common heads and summaries are prepared.
(ii) Preparation of financial statements Results of business operations and the financial position of the concern can be ascertained from accounting periodically through the preparation of financial statements namely, income statement or trading and profit and loss account and balance sheet. This helps in distribution of profits to the owners and to provide funds for future growth of the business. (iii) Assessment of progress Analysis and interpretation of financial data can be done to assess the progress made in different areas and to identify the areas of weaknesses. Management is