6 November 2021

10 Functions of Financial Accounting

Complete Financial Accounting Functions

Gambar : stevepb

1. Knowing the Advantages and Disadvantages

The first function of financial accounting is to conduct audits related to profits and losses that go into the company.  On that basis, an accountant must be able to calculate both correctly.

Later the data related to the advantages and disadvantages can be used as the basis for decisions.  Mainly related to plans to profit from future sales.

2. Report to company management

The second function is as a form of report to the company.  This is the responsibility of the accountant that must be coordinated with other external parties of the company.

Even so, the company's internal parties are also an important element to know about the company's financial statements.  Because this is urgent as information that will be used as material for future company management.

Now this financial report can later be used as material for company evaluation.  Mainly to determine policies related to the company's next business or strategy.  With financial accounting, of course, the preparation of reports is more structural and systematic.  Especially those related to liabilities, assets, capital or liabilities and taxes.

3. Profit sharing or profit

The next function is to help the company to determine the rights for the elements of the company that have contributed to raising it. This right includes all elements, both internal and external.  One of the rights in question is the right to earn profits for partners or investors.  Meanwhile, the company's internal rights relate to employee salaries and bonuses.

The rights in question are not only in the form of material, but the company's funders must also know the management as a whole.  One of them is understanding what sales strategy is being implemented.  With financial accounting, the company's financial calculations can be found.  From there it can be assessed whether the rights are granted according to the standard or are added with other rights.

4. Monitoring and Controlling

Financial accounting has an important function to monitor and supervise various activities within the company.  Every transaction in the company must be controlled to eliminate the potential for losses.

Controlling can be successful if the company, especially the shareholders and external parties, in this case is the government, coordinates both through policies and economic decisions for the company.

5. Help achieve company goals

The next function is to be able to be a help for the company when it wants to achieve the goals that have been set previously.  Of course, there is a plan that the company will reach certain goals that are its targets.

For that reason, the accounting officer has the responsibility to convey data related to financial transactions in a business unit.  Therefore, it is necessary to have the ability to analyze, evaluate and achieve the agreed goals.

6. As supervision

Financial accounting functions as a supervisor for the activities of a business unit or company.  Mainly related to the problem of financial transactions.

7. Budget maker

The preparation of a company budget is an important aid instrument in order to achieve the goals that have been planned in advance.  Both during the initial planning period last year and future transactions.

8. Compilation of accurate information

Financial accounting is useful in the collection of data that remains related to the cycle of changes in the net economic resources of the business unit.  Usually caused by the emergence of financial activity in order to make a profit.  Later the cycle of economic resources, one example of which is excessive company spending, can be reduced or marginalized in order to prevent the company's wasteful actions.

 9. Company mapping

The next function is to map sales and inventory.  This includes those related to company expenses.  Such as expenses for employee salaries and others.

 10. To simplify the evaluation process

The last function of financial accounting is to facilitate the evaluation process.  It means that with financial accounting reports, of course there are concrete data that will be considered in planning related to the company's development in the future.

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