(b) Explain four main functions of accounting.

(a) The main functions of accounting are as follows: (a) Measurement: Accounting measures past performance of the business entity and depicts its current financial position. (b) Forecasting: Accounting helps in forecasting future performance and financial position of the enterprise using past data and analyzing trends. (c) Decision -making: Accounting provides relevant information to the users of accounts to aid rational decision -making. (d) Comparison & Evaluation: Accounting assesses performance achieved in relation to targets and discloses information regarding accounting policies and contingent liabilities which play an important role in predicting, comparing and evaluating the financial results. (e) Control: Accounting also identifies weaknesses of the operational system and provides feedback regarding effectiveness of measures adopted to check such weaknesses. (f) Government Regulation and Taxation: Accounting provides necessary information to the government to exercise control on the entity as well as in collection of tax revenues.