Generally it is assumed that account
shows true and fair view of financial statement of an enterprise. But it has
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
- 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
- Activities of accounting
are not limited.
Area of service of Accountant
Some of services are as
(1) Maintenance of books of accountants
- Record transactions in systematic manner.
- Help ascertaining profit and loss and financial
- Help in planning, decision-making,
(2) Statutory Audit
- Every company requires
to audit their accounts by an external auditor.
- Accountant helps auditor
to audit the accounts.
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
(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,
- 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
- For valuation of business.
- Pension scheme.
1) Secretarial work
2) Share Registration work
3) Company formation
4) liquidation of company.
6) Cost Accounting