What is the primary objective of accounting?

Accounting has one purpose: letting you know what happened in your business from a financial standpoint. It is likened to a history lesson, which is not unimportant; however, only you will genuinely benefit by interpreting this history. It is also known as the language of business. It is not necessary to look at numbers but a few meaningful relationships that speak for themselves. Not only how much profit you made, but what it concerned something else.


Accounting is the art of recording, classifying, summarizing, and analyzing the transactions in terms of money and can be recorded in the books of account for different results. Hence, accounting, and as such, benefits management in many ways. Accounting involves recording transactions and compiling them in reports.


The essential purposes of accounting Services are-

  1. Determining profit or loss- This means it helps determine financial performance, i.e., profit earned or loss incurred. This is analyzed with the help of Trading and profit and loss accounts.
  2. Determining financial position - This is known as a balance sheet. By performing it, the position of the business is analyzed by the users for inter-firm and inter-firm comparisons.

The primary objectives of accounting are as given below: -

1. To maintain a business record: The main aim of accounting is to keep a proper record of financial transactions for future use. These records can be used as and when required by the users.

2. To ascertain profit or loss: The primary objective of every business is to earn a profit. Therefore, accounting means establishing profit or loss made by a business over a given accounting period. For this purpose, an income statement or Trading and profit and loss accounts are prepared.

3. To present financial position: - It is used in the preparation of the balance sheet. The balance sheet shows the valuable importance of the organization.

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4. To provide information to the users: - It provides financial information and the result of the business operation to internal and external users. The internal users include all the organizational participants at all levels of management. For example, the officer and staff of an enterprise need helpful and timely information for making different types of business decisions. In addition, the investor, lenders, financial institutions, the government, etc., are external users.

5. To help determine the tax amount: It is also helpful in calculating accurate liabilities relating to income tax and other taxes.

6. It also helps evaluate the employee and their working efficiency and communicate and spread the accounting information to the user.

7. Accounting contributes the biggest to any organization by preventing fraud and prevents profit risks

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Scope of accounting

  •     1. Business    
  •     2. Government organizations    
  •     3. Non-Government organizations    
  •     4. Individuals    
    1. Business    

Accounting is extensively applicable in the business sector. Today, in the present day, most people are engaged in the business sector. Therefore, all businessmen follow the Generally Accepted Accounting Principle (GAAP) to determine the business firm's profit, loss, and financial position.

    2. Government organizations    

Though government organizations do not follow the Generally Accepted Accounting Principle (GAAP), it keeps systematic records of all transactions to find the position of public funds.

    3. Non-Government organizations    

Non-government and service establishments such as NGOs, INGOs, Red Cross Society, SOS, etc., that play a vital role in the nation's progress also utilizes accounting. The accounting system used in these establishments is usually called fund accounting.

    4. Individuals    

Individuals also perform commercial activities to earn their livelihood. Therefore, they also serve some form of accounting to draw financial information for making personal economic decisions.

Benefits of Accounting

Accounting reports can be analyzed to provide management with financial information that can be used to run a business, plan, and make changes when the business is not going as expected. For example, suppose sales of a particular item are flat and not as expected. In that case, accounting reports show this reality, and management can make decisions about it--a clear advantage of accounting information.

  1. Information about the financial position.
  2. Establish a profit or loss during a period.
  3. Having better accounting controls
  4. Accounting helps in decision-making.
  5. Accounting records are proof of acts.
  6. Collection and payment of cash.
  7. Accounting helps in obtaining loans for business.
  8. It helps investors and government & others.

Meaning of accounting given by the American institute of certified public accounts in 1961 "Accounting is the art of documenting, categorizing, and condensing in a meaningful manner and terms of money, transaction, and event, which are, in part, interpreting the results thereof."


Recording refers to creating journal entries for every financial transaction with debit and credit amounts.


Classifying refers to classifying each debit/ Credit Transaction to capital or Revenue and Assets, Liability, Revenue, or expense.


Summarizing refers to grouping the transactions of assets, liability, revenue, or expenses and preparing the financial statements such as profit, and loss account, Trading, and Balance sheet.

In case of

  • Trading, Manufacturing and customer service-oriented organization, the sum of all income and expenses are referred to as profit and loss account.
  • Social service-oriented organizations like schools, Hospitals, and Government Organizations, Banks are referred to as Income and Expenditure accounts.

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Bookkeeping

You can create any structure you want by using the same tools as in the regular workflow. Add buttons and forms or anything else you'd want.

Being experienced with an accounting background, we can offer a wide range of reliable and accurate bookkeeping services. A common question often asked is, "What exactly does a bookkeeper do? "The answer to this question is shown below for our services as specialist bookkeepers. We can,of course, modify our services to suit the needs of your business whether you need a few of these services or all.

·      Accounts Receivable*-Invoice preparation and follow-up with the client

·      Accounts Payable* - Suppliers' invoices are processed and paid when due.

·    Bank Reconciliations -Reconciling Bank and Credit Card accounts with daily bank feeds

·     GST Filing                        - Timely filing of Bi-Monthly or Six-Monthly returns

·     System Training               - Training is required whenever you choose new software. We provide free training.

·    Accounting Software conversions – With our expertise, we can switch your accounting information to XERO/MYOB

·        Payroll

·        Unlimited Email Support

*Note:- Accounts Receivable and Accounts Payable are closely monitored to ensure that your business has no issues with cashflow

Payroll Management

Business Pillars offers all-inclusive payroll services that help your business run efficiently. We are committed to being legally compliant. Our services are built to simplify payroll processes for small to medium-sized businesses throughout New Zealand.

PAYROLL processing made easy

We provide the most updated payroll solutions tailored-made that is affordable to your requirement. We are committed to taking care of all the work demanded, allowing you to focus your time and energy on more essential things you love to do.

Our payroll services are:

·        Employees pay, On-time payments including benefits, reimbursements, deductions, Weekly/Fortnightly/Monthly

·        Employee PAYE

·        Payday Filing   – Timely filing returns to IRD

·        Leave entitlements– Accruals for each type of leave

·        Leave Payment - As per Holiday Act 2003

·        KiwiSaver contributions

·        Maintaining payroll records – payments and documentation

GST Filing

Timely Processing

We ensure that we file all GST Tax returns two weeks before the due date. We keep our clients informed before we proceed. This ensures that the client is at ease.

·        GST Filing        - Timely filing of Bi-Monthly or Six-Monthly returns

Monthly / Quarterly Advisory

The clients are in a position to process their reports from the software chosen. Based on the service requested, additional reports are also given that are not available in their chosen software. These reports enable the client to make corrective business decisions. Business Pillars reaches out to clients who require more assistance.

Monthly Management Meetings

The primary purpose of a monthly management meeting is to get the business to grow. This is either done through a phone call, zoom, or meeting in person.

Cash flow Management

Managing cashflow is a significant responsibility faced by most small businesses. We reach out to businesses making it stress-free to ride on the highs and lows of the cash flow throughout the year.

We assist in producing a cashflow statement which is a financial statement that summarizes the amount of cash entering and leaving the business. The cashflow statement measures how well the business can manage its cash position, meaning how well the business can generate cash to pay its debt commitments and fund the day-to-day operating expenses.

Budget Forecasting

Small business budgeting and forecasting

We need to get some relevant numbers to know what the future will look like regarding a business. Budgeting and forecasting will help to support this vision. Business Pillars can work alongside you to understand these basics so you can build a financially sustainable business.

What is a budget?

The budget estimates how much money will come in and go out from your business over time (usually a year). Budgeting and forecasting normally benefit all businesses and first-time startups to see if they can afford to run the business and compensate for all their hard work with a good return for their initiative.

What are the main principles of having a budget

Budgets forecast the money-making possibility of a business. It will also highlight things like:

  • How much will it cost to startup?
  • How much money is needed to borrow?
  • When will be the breakeven point?
  • How much should the customers be charged?
  • How many staff are needed?

Monthly / Quarterly Advisory

The clients are in a position to process their reports from the software chosen. Based on the service requested, additional reports are also given that are not available in their chosen software. These reports enable the client to make corrective business decisions. Business Pillars reaches out to clients who require more assistance.

Job Management

Job Management is software that supports project managers and teams to complete client requests and projects efficiently. Most professionals depend upon this job tracking software which assists them in supervising multiple sections of a business. Business Pillars are here to assist in setting up this service to track income and expenses related to service jobs.

XERO and MYOB both have the capability for Job Tracking

These are the advantages:-

·        Create quotes immediately

·        Easily track jobs from quote to invoice

·        Schedule the jobs on the go

·        Get paid quicker