Objectives, Advantages and Limitations of Accounting

There is a few about objectives, advantages and limitations of accounting to do, in the following is the several things which often people use.
Why do we need Accounting?

* Maintenance of financial records - the basis of accounting function
* Ascertainment of Profit and Loss - net results of operations
* Depiction of financial position - a true and fair view
* Providing information - on resources utilization for decision

What are the advantages of maintaining accounts?


* Systematic record keeping
* Assessment of progress
* Tool for SWOT analysis (Strengths Weaknesses Opportunities Threats)
* Aid in decision making
* Statutory compliances
* Information to interested groups
* Legal evidence
* Taxation compliance
* Acquisitions and Mergers (of enterprises)


What are the limitations of accounting?
Accounting,

* Ignores transactions which cannot be expressed in terms of money
* Cannot measure qualitative aspects of products, policies, management and workers
* Cannot quantify morale and motivation of human resources
* Relies on estimates and forecasts in valuations of investments, inventory and useful life of assets employed
* Relies on historical data on valuation of assets ignoring price level changes and inflation

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