Limitation of Accounting

Generally it is assumed that account shows true and fair view of financial statement of an enterprise. But it has following limitation

1) Accounts cannot reflect loyalty and skill of personnel which are most valuable these days.

2) Accounts never tell future of an enterprise. It only records past events that has occurred. Example- Balance sheet is prepared at the last moment of last day of accounting year. It never estimates what will happen in future.

3) Accounting mostly ignores changes in money factor like inflation.

4) In some occasions accounting principles conflict with each other.

5) Some accounting estimates require personal judgment like provisions for doubtful debts, method of depreciation adopted, writing of intangible assets etc.

6) Financial statements consider only thing which are in monetary term. Those which are not in monetary term are not considered by financial statement like human resources.

7) Different Accounting policies for treatment of same item increase the probability of manipulation.

Role of accountant in the society

There are few professions in the world having high esteem in public eyes, Accounting profession is one of them.

 - It helps business to see its financial position and plan for the future.

 - It serves for welfare of society in numbers of ways by having education, training and experience

- Accountants help not only in the matter of taxation, costing, management accounting, financial layout but also for financial planning and policies, budgetary policies even economics principle.

- Activities of accounting are not limited.

Area of service of Accountant

Some of services are as follows:-

(1) Maintenance of books of accountants

 - Record transactions in systematic manner.

 - Help ascertaining profit and loss and financial position.

 - Help in planning, decision-making, controlling function.

(2) Statutory Audit

- Every company requires to audit their accounts by an external auditor.

- Accountant helps auditor to audit the accounts.

(3) Internal Audit

Internal auditor examines the accounting system and ensures management that accounts have been properly maintained. It improves operational efficiency of business.

(4) Taxation:- An accountant can handle taxation matter of business as well as of individual and can represent himself on their behalf to taxation authorities and settle tax liabilities. It can also reduce tax liability by proper planning.

(5) Management Accounting and consultancy services

- Management accountant is mainly responsible for internal reporting to management. It provides services for planning controlling current operation, decision-making and special matter and making long term plans. - Accountant also provides consultancy service in area of management information system, expenditure control, new investment, working capital management, corporate planning etc.

(6) Financial advise:-- Financial advise in following area:-

 - Investment, Insurance, Business expansion, Investigation etc,

 - To ascertain financial position

 - To make or buy decision

 - To ascertain reason of profit fallen

 - To increase efficiency

 - In case of fraud

 - Reasons, Nature, extent and suggestion for prevention

 - For valuation of business.

 - Pension scheme.

Other services

1) Secretarial work

2) Share Registration work

3) Company formation

4) liquidation of company.

5) Arbitrations

6) Cost Accounting