Financial accounting plays important and useful role by developing the information for providing answers to many questions faced by the users of accounting information.
Besides, accounting is also useful in the following respects:-
(1) Increased volume of business results in large number of transactions and no businessman can remember everything. Financial accounting firms records obviate the necessity of remembering various transactions.
(2) Accounting record, prepared on the basis of uniform practices.
(3) Cocooning records, backed up by proper and authenticated vouchers are good evidence in a court of law.
(4) If a business is to be sold as a going concern then the values of different assets as shown by the balance sheet helps in bargaining proper price for the business.
(5) Taxation authorities (both income tax and sales tax) are likely to believe the facts contained in the set of financial & managerial accounting books if maintained according to generally accepted accounting principles.
Besides, accounting is also useful in the following respects:-
(1) Increased volume of business results in large number of transactions and no businessman can remember everything. Financial accounting firms records obviate the necessity of remembering various transactions.
(2) Accounting record, prepared on the basis of uniform practices.
(3) Cocooning records, backed up by proper and authenticated vouchers are good evidence in a court of law.
(4) If a business is to be sold as a going concern then the values of different assets as shown by the balance sheet helps in bargaining proper price for the business.
(5) Taxation authorities (both income tax and sales tax) are likely to believe the facts contained in the set of financial & managerial accounting books if maintained according to generally accepted accounting principles.
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