From the definition of accounting above, the followings can seen as its functions:
1.
RECORDING: One of the
basic function of the bookkeeping
aspect of accounting is to ensure that all the business transactions of financial nature are recorded
in an orderly manner in the books
of prime entry of journals.
2.
CLASSIFYING: This is concerned with the systematic
analysis of the recorded data
with a view to grouping transactions
or entire of a similar nature at one place. Classification is done in the ledge
which is the book continuing in
different pages, individual accounts heads under which financial
transactions of similar nature are collected.
3.
SUMMARIZING: This involves
presenting the classified data in a manner
which is under stand-able and useful to the internal as well as external end –users of accounting statement .
This process will lead to the preparation of accounting statements such as
- The trial balance
- Profit and loss account
- The balance sheet
4. RECORD KEEPING: It records those transactions and events in terms of money which are of a financial character transactions which are not of financial character are not recorded in the books of accounts. E.g. if an organization has employed professionals who are well experienced, it will be of great use to the business but since it is not of a financial character and capable of being qualified in a monetary terms, it will not be recorded in the books of accounts of the organization.
5.
ANALYZING AND
INTERPRETATION: In order
to make a meaniful judgment about
the financial condition and profitability of business operations, by
the end users of
accounting , information,
the recorded data is analyzed and interpreted.
“Analysis”
means methodical classification of financial
statement data with a view to putting
them in a simplified and
understandable form e.g. “Interesting”
means to explain the meaning and significance of the acts simplified in the
analysis.
6.
COMMUNICATING: This is the
process of transmitting meaningfully
analyzed and interpreted accounting
information in a proper form and
manner to the proper persons. The means
of achieving this is by preparing and distributing accounting reports such
as the balance sheet, and additional
information in the form of
- Accounting ratios
- Notes to the accounts
- Graphs
- Diagrams
- Fund flow statements