ABSTRACT
Accounting has many limitations as a means of controlling a business, for it merely measures one side of the activities; those which can be assessed in terms of money. Basically all accounting systems start from the balance sheet, which is a statement of the condition of the business at the time it is drawn up. The profit and loss account is a record of day-to-day trading, the balance sheet shows the financial position of the company at a given date. The system of accounting in use today is known as the ‘double entry’ system, because it obliges the accountant to make two entries for every transaction. The art of cost accounting is a comparatively recent development. It has been of enormous benefit to management. The conventional way of calculating costs is what is known as standard costing. An added complication of accounting, which was not shown in our sample accounts, is the fact that payments are often not made immediately.
