Objectives of an Accounting System

Objectives of an Accounting System:  

An accounting system should be developed to meet the following objectives:

·         To record, classify and report on financial transactions.

·         To ensure that accounting is done in accordance with generally accepted accounting principles and procedures

·         To provide management and other stakeholders with information

·         To understand past performance and plan future direction

·         Understand various possible risks and their controls

·         Defining the reporting

·         To physically safeguard the organization’s assets i.e. to prevent fraud and other losses.

·         To ensure that the following basic internal control features exist:

o   Segregation of duties (i.e. physical control over assets must be separate from recording and operational functions.

o   Appropriate authorization of transactions

o   Internal checks and balances

o   Adequate management supervision

o   Regular and independent review by an external auditor

Difference between Accounting vs. Accountancy

Accounting vs. Accountancy

Accounting: It consist of body of knowledge (principle’s, postulates, assumptions conventions, concept’s and rules) governing the science of recording ,classifying and analyzing the financial transaction’s is Accounting.

 

Accountancy: Whereas accountancy is the practice and art of the science of accounting.

                      The common parlance the term accounting and accountancy are used interchangeably but it should be clearly understood that the accounting is the discipline i.e. branch of knowledge  whereas accountancy is a profession just like any  others.