PURPOSE AND SCOPE OF ACCOUNTING

Accounting functions as the primary means of communication in the business world, offering a systematic structure for documenting, condensing, evaluating, and conveying financial data. The objective of this is complex, including multiple stakeholders and aiding in the facilitation of decision-making processes. Accounting fundamentally aims to accurately monitor and disclose the financial performance and status of a company (Accounting Corner, 2023).

The main objective of accounting is to furnish internal management with relevant information. Management accounting encompasses the creation of customized reports and analysis that aid managers in making well-informed choices. These decisions encompass a wide range of factors, including pricing methods, budget allocations, resource use, and investment choices. Accounting provides managers with information on expenses, revenues, and profitability, allowing them to assess performance, establish goals, and develop strategies to achieve organizational objectives (Accounting Corner, 2023).

Accounting serves the purpose of providing openness and responsibility to external stakeholders, including investors, creditors, regulatory bodies, and the public. Financial accounting, which adheres to either generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS), is concerned with the creation of financial statements such as the balance sheet, income statement, and cash flow statement. These statements offer a thorough summary of an organization's financial status, achievements, and cash movements, allowing stakeholders to evaluate its sustainability, financial stability, and profitability (Jayachandran, 2024)

Moreover, accounting plays a significant function in enabling economic transactions and promoting trust in the marketplace. By maintaining accurate records of financial transactions, accounting maintains the integrity and dependability of financial information communicated between parties. This, in turn, enhances investor trust, facilitates capital allocation, and contributes to the effective functioning of capital markets.

Beyond its traditional functions, accounting increasingly crosses with emergent fields such as sustainability reporting, forensic accounting, and digital transformation. Sustainability accounting comprises the measurement and disclosure of environmental, social, and governance (ESG) aspects, reflecting an increasing emphasis on corporate responsibility and long-term value development. Forensic accounting utilizes investigative techniques to find financial fraud or wrongdoing, serving as a crucial tool in fraud detection and prevention initiatives. Meanwhile, digital innovations, including automation, artificial intelligence, and blockchain technology, are altering accounting methods, boosting efficiency, accuracy, and data security.