Qualitative Characteristics, Objectives and Roles of an Accountant

What is accounting?

The systemic Qualitative process of identifying, measuring, classifying, recording, verifying, summarising and interpreting financial records is known as accounting. The role of accountant carries out accounting operations. As opposed to what most people seem to think, accounting involves more than just computing numbers.

There are countless objectives available in the role of accountants in several accounting firms in London. To fully understand the role and objectives of an accountant, you would have to know what it means to be one.

Characteristics of accounting

The characteristics of accounting are broadly classified into two. They are

• Primary characteristics and
• Secondary characteristics

Primary characteristics

The primary characteristics of accounting include relevance and reliability

Relevance

This factor in accounting is related closely to the concept of useful information. This means that the information used must make a difference in taking various decisions by the user. Know that the information gathered by the users that is relevant for one purpose may not be the same for other purposes. This relevant information can also reduce the uncertainty of decision-makers about future acts.

Reliability

Information required to form judgments about a business firm’s earning potential and financial standing must be reliable. You should note that reliability differs from item to item. The reliability of the information in a specific situation can be affected by a number of factors like uncertainties inherent in the subject matter and accounting measurements.

Secondary characteristics

The secondary characteristics of accounting include comparability and understandability

Comparability

This means that the user should be able to compare the accounting information of an enterprise of that period with that of other periods. This is known as an intra-firm comparison. The comparison also means comparing the accounting information of that enterprise with that of other organisations. This is known as an inter-firm comparison.

Understandability

This simply means presenting information provided through the financial statement in a manner that is completely understandable by the users.

Objectives of accounting

The main objectives of accounting include the following

Protection of business properties

Accounting protects the business properties from use that is unjustified or unwarranted. One of the ways to help in the protection of properties is through information about the said property. This information will help the proprietor assure that the business’s funds are not underutilised or wasted.

Ascertainment of financial position

Accounting helps the business owner to know about his financial position. This is served by the statement of assets and liabilities of the business on a particular date known as the Balance sheet or the Position Statement. These statements serve as tools for ascertaining the financial status of the business.

Information statement

Accounting serves as an information system for the collection and communication of economic information about the business enterprise. This will help the management make appropriate decisions when the time comes.

Ascertainment of profit

Accounting helps in ascertaining the net profit earned or lost on account of carrying the business. This is done by keeping a record of all books of account concerning revenues and expenses of a particular period.

Facilitation of decisions

Accounting helps collect information at the required points of time to the required levels of authority. It also helps in the complete analysis and reporting of this information. All these help in the facilitation of rational decision making.

Keeping of systemic records

This can be seen as the main objective of accounting. It involves keeping a systemic record of all financial transactions of the institution. It helps the users to fully understand the day to day transactions systemically, to gain knowledge about the overall business.

Roles of accounting

When it comes to the development and growth of an enterprise, accounting plays a major and useful role. Whether they are large firms or small accounting firms in London, the role of accounting cannot be reduced or ignored. It also helps in the development of information for the various types of users. On that note, the roles of accounting include the following:

• Accounting plays a major role by preparing records based on uniform practices that will enable a business to compare results of one period with another period.
• Accounting records reduce the necessity of remembering various transactions. This makes it easier as there are numerous volumes of business results and transactions.
• Accounting records are good evidence in a court of law, as proper and authenticated vouchers support them
• Accounting records help in bargaining the proper price of different assets due to the records displayed in the balance sheet. This comes in handy if the business is to be sold in the future
• Facts contained in the accounting books are maintained according to generally accepted principles of accounting. This will aid a better understanding for users of financial information.

Finally, accountants in London prove to be indispensable in dispatching their duties in every enterprise they are found in. Find out more about accountants and accountancy when you reach out to us at National Accountants London.