Question

500 words describing the roles of the accounting function in business and why those roles require knowledge of technology and business processes.?

Answer 1

Accounting is a service activity. It is important as it provides quantitative information of financial nature to various stakeholders which is intended to be used in making economic decision. These stakeholders include investors, management, government, suppliers, financiers, regulators etc. Business accounting help in making a number of short term and long term business decisions which helps an enterprise to grow as well as penetrate in market. The three major statements which is generated by Business accounting system are as follows:

• Profit & Loss Account (Income Statement)

Income statement shows the net income generated/net loss incurred by an enterprise during a particular accounting period.

• Balance Sheet or Statement of financial position

Balance sheet statement shows the financial position of an enterprise as on particular date. Closing balance of various assets and liabilities are reported in balance sheet. The excess of assets over liabilities is capital.

• Cash Flow Statement

Cash Flow Statement shows how changes in balance sheet and income statement which affect cash and cash equivalent. Basically it shows cash inflows and outflows among operating, investing and financial activities of an enterprise.

These three statements when combined together forms Financial Statements . The financial statements are required by all the stakeholders.