Question

Which of the following is the basic function of accounting?

• A. Recording business transactions
• B. Budgeting
• C. Forecasting
• D. Auditing

Answer 1

Answer:

A. Recording business transactions

FUNCTIONS OF ACCOUNTING:

1. Recording - Journal

2. Classifying - Ledger

3. Summarising - Trail Balance and L A/C, B.S.

4. Analysis and Interpretations

5. Communications

1. Recording : The basic function of Accounting is recording of business transactions.

2. Classifying : It is the process of bringing together items of similar nature at one place. It is done in the book called ledger.

3. Summarising : It is the presentation of classified data in a way that is understandable by the users. It includes the preparation of trail balance, P AND L A/C ,B.S.

4. Analysis and interpretation : The financial data is analysed by the users to get information about the result of business and its financial positions

5. Communication : It is with the help of accounting that an organisation communicates with the interested parties