What are the Objectives of Bookkeeping
There are various objectives of bookkeeping and accounting to different parties i.e the owners, managers, creditors, government, customers etc. The common important objectives of book keeping are:
Ascertainment of result of operation
Bookkeeping is intended to the ascertainment of the result of operation i.e the profit/loss of a firm or company by recoding all the revenue income and gains and expenses and losses of a certain period and by comparing them. It is ascertained by preparing the income statement or profit and loss account at the end of each fiscal year.
Ascertainment of the financial position
It helps to ascertain the financial position of a firm or company by recording the appropriate values of different types of assets, specially in its net cost, and the capital and liabilities up to the date. It is found by preparing the balance sheet at the close of the fiscal year.
Maintaining control over the assets and budget
Book keeping maintains control on the assets, income and expenses of all types by making their complete records. It helps one to see how efficiently the assets are utilized and the budget is disposed off. Thus, it establishes financial discipline by controlling frauds on budget and its expenditure.
Prediction of the volume of cash for future
Bookkeeping helps the future forecast of cast by verifying the receipt and payments of an organization and the proposed expansion programmes. Specially, it is important to those whole financial system is based upon cash budget.
Assessment of tax liabilities
Book keeping keeps the complete records of all business transactions and get them audited. Book keeping involves the income statement and balance sheet at the last of the fiscal year. It gives the details about the financial affairs of an organization, including the sales and net income on the basis of which tax liabilities i.e sales tax, income tax etc. can be easily assessed.
Importance and advantages of Bookkeeping
Book keeping is important to all, who are engaged in any sort of occupation and rather important to the organization for ascertaining the true state of the organization’s affairs. The importance of book keeping may be studied with respect to the different sectors.
Importance to the professional and other individuals
Book keeping is important to the professionals like doctors, engineer, mechanics, lawyer, auditor etc. for recording their incomes and expenses and profits and losses etc. regularly and systematically for controlling expenses and gaining income. Similarly, it is important to the general people for making a proper balance of their income and expenses for their personal house hold affairs.
Important to business organizations
Book keeping is essentially important to a business organization for keeping the complete records of the transactions. It is important, specially to determine the result of operation, financial position, controlling assets and other resources, establishing financial discipline, assessing tax liabilities etc.
Importance to the government
Book keeping is important to the government to evaluate the progress of the government projects, to collect necessary statements, data and information for the preparation of government budget, to control over the leakage, misuse and misappropriation of budget etc. of the government property and resources.
Important to other parties
Book keeping is equally important to the financial analysts and other interested parties like investors, creditors, banks, customers etc. to study and analyze the different financial statements of a certain firm or company. It is also important to the job seekers for better opportunity for getting employment.