Scope of Accounting in Business and Personal Life

Scope of Accounting is wide and extends in Business, Trade, Government, Financial institutions, individuals and families and and every other arena. Accounting principle is used in every step.

Many thinks the Accounting scope is only limited to financial transactions of a business concern but in fact it is not true.

Accounting is essential for all types of business organizations, even for individuals and families. Financial transactions occur all along in business organizations with government office, non- trading concerns and professionals.

The functions of Accounting are to keep accounts of those financial transactions. Even accounts are to be kept in case of individuals and families.

All financial activities of individuals, business concerns, non-trading concerns, government, semi-government organizations, doctors, advocates, accountants and other professionals come under the scope of Accounting.

In fact, where financial transactions occur there is the importance of Accounting. But necessity of Accounting is felt sharply in keeping accounts of business concerns.

Businessmen, executives, accountants, hospitals, administrators, head of educational institutions and politicians etc. including the people and organization of various stages can discharge their responsibilities if they have clear concept about accounting information systems.

R. J. Bull has presented the following diagram of the scope of Accounting.

Scope of Accounting in Business and Personal Life

Therefore,

From the above diagram it is not difficult to realize that accounting data are processed collecting and preparing data adapting methods of various processes.

In later stage the report is prepared evaluating accounting data. This report is prepared for external and internal uses. Roughly the areas where accounts are kept are described below in short.

Scope of Accounting in personal life

The financial transactions which occur in individual life of a person are recorded properly in the books of accounts with a view to ascertaining receipts- payments and assets-liabilities.

Scope of Accounting in business organizations

Account is rightly called ‘Language of Business’. The prime objective of business is to earn profit. Financial transactions of a business concern are recorded in the books of accounts to ascertain operating results and financial position.

Besides accounts of financial transactions’ of a business concern are kept properly to fulfill other objects also.

Scope of Accounting in non-trading concerns

Keeping accounts in non-trading concerns like, school,-college, hospital, madrasa, mosque, temple, church, club, association etc. is essential because financial transactions occur in these institutions also.

Scope of Accounting in Government Offices

System of accounts is prevalent in govt. offices, courts and state-owned organizations for determining income-expenditure and proper running of administration.

In preparing national planning and budget, accounting information is needed and reasons for national progress or regress can be known through interpretation and evaluation of accounting data.

Scope of Accounting in professionals

Professionals like doctors, engineers, advocates, actors, actresses earn by their professions. They also maintain their accounts of income and expenditure. It is mandatory for them to maintain accurate accounts of income and expenditure as they are to pay income tax.

From the above discussion it is very much clear that the fields of Accounting is very wide, that is, it spreads in all walks of social life.

Trade and commerce is rapidly changing and developing with changes of everything of this dynamic world. The application of accounting has achieved a new shape with the development of technology.

The advancement of accounting is continuing with the multifarious development of science and technology, factory and industry and trade and commerce.