The principle is a general law or rule adopted professed as a guide to action a settled ground or basis of conduct.
Accounting principles are really speaking, the rules which are based on the customs usages and tradition and all accounting practices are based on them. These Accounting principles are not fixed but they vary according to changes in time.
According to the Canadian Institute of chartered accountants, Accounting principles are the body of doctrines commonly associated with the theory and the procedure of accounting. They serve as an explanation of current practices and as a guide for the selection of convention where an alternative exists.
Following are the main objectives and function of accounting:
1. Ascertain Profit and Loss: The objectives of accounting is to ascertain profit or loss in business.
2. To know financial position: All businessman want to know the financial position of their business. So, they prepared the balance sheet.
3. Provide Information : Groups and users who are directly or indirectly related to affairs of the business enterprise. Owners of business, suppliers etc. use accounting information.
4.Facilitate Decision-making Accounting information is used by different persons and institution. The management has to make decisions from time to time on different matters. In the absence of financial reports, it will be difficult to make decisions.
5. Legal requirements: Accounting aims to meet various legal requirements. The accounting records provide the best bases for filing returns of both direct and indirect taxes.
6. Complete records: Due to accounting system businessmen need not burden their memories by remembering everything.
Following are the functions of Accounting :
1. Recordutive Functions: There is a limit to human memory and therefore a systematic record of all transaction is essential for every business.
Accounts keep a systematic record of financial transactions.
Accounts keep a systematic record of financial transactions.
2. Interpretative functions: Planning controlling and decisionmaking functions of management are well-aided by accountingrecords.Accounting facilities. National decision-making by providing relevant data.
3. Ligand requirements: The provisions of various laws like income-tax,- sales-tax Act requires the submission of various states for different purposes.
4. Protect Business Assets: Accounting maintains the proper record of various assets and thus enables the management to exercise proper control over them with the help of various information.
5. Communicate the financial Result: Accounting is offer refereed us as the language of business. Accounting serves as a means of communication of various types of information to people.