Who is an Accountant?
An accountant is a person who records the business and financial transactions on behalf of the organization, he also reports the performance of the company to the management, and issues the financial statement of the concern. Several examples of the types of transactions in which an accountant is involved are as follows:
An accountant issues an invoice to a customer which involves the recording of sale and account receivable.
An Accountant also receives an invoice from a supplier, who is involved in the recording of an expense or asset or an account payable.
An accountant issues a salary or wage paid to an employee involving the recording of an expense and outflow of cash.
An accountant also reconciles the bank statement.
The Records Produced by an Accountant
In addition to the work of transactions performed by the accountant, the recording is also produced by an accountant. Following are the types of recording that is being provided:
The Financial statements are presented to the owners or the business operators of a business, as well as to the lenders and the creditors.
Management reports are also issued to the management team. The reports are highly customized according to the needs of the entity, which may cover important business topics.
The tax reports are also issued to several government entities. The reports are then provided in detail regarding the amounts that are paid for income taxes, property taxes, and other sales taxes.
Process Creation by the Accountants
An accountant is again involved in the creation of a number of processes within the business network, which typically include several controls to ensure that the assets are properly managed by them. Examples of such processes are:
Shipments to the customers
Receipts from the suppliers
Cash receipts from the customers
Maintaining Books of Accounts
The Books of accounts have to be maintained if the gross receipts are more than Rs. 1,50,000 in 3 preceding years says the tax law. This too applies to a newly set up profession whose gross receipts are expected to be more than Rs. 1,50,000.
All the below professions are required to maintain the books of accounts:
Legal Firms
Medical Institutes
Engineering Fields
Architectural Sectors
Accountancy Department
Technical Consultancy Services
Interior decoration professions
The authorized representative, who represents another person for a fee before a tribunal or for any authority constituted under any law
Film artist
Company secretary
Primary Function of Accountant
Accountants in the growing business arena perform a wide variety of functions. The primary functions performed by them can be summed up in the following:
1. Maintaining the Books of Accounts
This is the primary function of an accountant, which is to perform the functions of accounting. The accountant is required to maintain a systematic record of all the financial transactions of the firm.
2. Statutory Audit
The laws as operated by the company law require a few organizations to be compulsorily audited by an auditor. So, the limited companies, the co-operative societies, companies, or the firms who have exceeded a certain turnover limit need their accounts to be audited.
3. Internal Audit
Few organizations opt for internal auditing, which can be done by the accountants.
4. Taxation
An accountant is also capable of handling the taxation matters for a firm or even for an individual.
5. Cost and Management Accountant
Cost and Management accountant does more than an ordinary accountant, he plays an overall advisory role in the cost department and the management of an organization.
6. Financial Advice
Accountants who have widespread knowledge and experience in many fields of the industries can also provide insight with good financial advice which in turn will be beneficial for the company.
FAQs on Accountant Functions: Key Responsibilities
1. What are the primary functions of an accountant in a business?
An accountant performs several crucial functions to ensure the financial health and compliance of a business. The main functions include:
- Bookkeeping and Record-Keeping: Systematically recording all financial transactions like sales, purchases, and payments.
- Financial Reporting: Preparing key financial statements such as the Balance Sheet, Profit and Loss Statement, and Cash Flow Statement.
- Auditing: Examining financial records to ensure accuracy and compliance. This can be internal for management or external for statutory requirements.
- Tax Compliance: Calculating, filing, and managing tax obligations like GST and Income Tax to adhere to tax laws.
- Budgeting and Forecasting: Assisting management in creating budgets and financial forecasts to plan future operations.
- Advisory Services: Providing strategic financial advice to management to aid in decision-making processes.
2. What are the five key responsibilities of an accountant as per the CBSE syllabus?
As per the CBSE 2025-26 commerce syllabus, the five fundamental responsibilities that define an accountant's role are:
- Maintaining Systematic Accounting Records: This is the core function of ensuring every business transaction is accurately recorded in the books of accounts.
- Preparation of Financial Statements: Creating the annual Profit and Loss Statement and the Balance Sheet to present a true and fair view of the company's financial performance and position.
- Assisting in Audits: Preparing and organising financial records to facilitate smooth internal and statutory audits.
- Ensuring Legal Compliance: Managing all matters related to taxation, including the calculation and timely payment of taxes like GST and TDS.
- Communicating Financial Information: Interpreting and communicating financial data to management and other stakeholders to support informed decision-making.
3. What is the fundamental difference between a bookkeeper and an accountant?
The fundamental difference lies in the scope and analytical level of their duties. A bookkeeper is primarily responsible for the systematic recording of daily financial transactions. Their role is to maintain accurate and organised ledgers. An accountant, on the other hand, uses the data recorded by the bookkeeper to analyse, interpret, and report on the financial information. The accountant's role is broader, more analytical, and includes preparing financial statements, handling complex tax compliance, and providing strategic financial advice.
4. How does an accountant's role extend beyond just recording numbers?
While recording transactions (bookkeeping) is a foundational task, an accountant’s role is far more strategic. They act as a financial interpreter for the business. Their responsibilities extend to:
- Analysis and Interpretation: They analyse financial data using ratios and trends to provide actionable insights into the company's performance.
- Strategic Planning: They assist in creating budgets, forecasting future revenue, and providing advice on key decisions like pricing, cost control, and investment opportunities.
- Risk Management: They help identify financial risks and implement internal controls to safeguard the company's assets.
5. Why must the function of auditing be kept separate from an accountant's daily record-keeping duties?
The function of auditing is separated from daily accounting to ensure objectivity and independence. An auditor's primary role is to verify that the financial statements prepared by the company's accountant are fair, accurate, and free from material misstatement. If the same person who recorded the transactions also audited them, it would create a significant conflict of interest. This separation is a core principle of corporate governance that ensures the financial reports are credible and trustworthy for external stakeholders like investors, creditors, and regulators.
6. How do an accountant's responsibilities differ in a manufacturing company compared to a service company?
While the core functions are similar, the focus shifts based on the business model:
- In a manufacturing company, an accountant places a heavy emphasis on cost accounting. They must track raw material costs, work-in-progress, finished goods inventory, and accurately calculate the cost of goods sold (COGS).
- In a service company (e.g., a software firm or consultancy), the focus is on tracking project costs, revenue recognition from contracts, and managing employee-related expenses like salaries and billable hours, rather than dealing with physical inventory.
7. How does an accountant contribute to a company's tax compliance?
An accountant is critical for ensuring a company meets its legal tax obligations. This involves several key tasks, such as accurately calculating tax liabilities (including GST, TDS, and Income Tax), preparing and filing all necessary tax returns by their deadlines, maintaining meticulous records required for tax audits, and advising the management on tax planning strategies to legally optimise the company's tax position.
8. In what ways do management reports prepared by an accountant differ from standard financial statements?
Management reports and financial statements serve different purposes and audiences. Financial statements (like the Balance Sheet and P&L Statement) are standardised, backward-looking reports intended for external stakeholders like investors and banks. In contrast, management reports are for internal decision-makers. They are highly customised, can be forward-looking, and contain detailed operational data not found in external reports, such as departmental expense breakdowns, sales performance by region, or budget vs. actual variance analysis.
9. How can an accountant's analysis directly influence a company's strategic decisions?
An accountant's analysis provides the financial foundation for major strategic decisions. For example:
- Pricing Decisions: By accurately calculating the cost of a product or service, an accountant helps management set a profitable selling price.
- Investment Decisions: Through techniques like capital budgeting, an accountant can analyse the potential return on investment for new machinery or projects, helping decide if they are financially viable.
- Cost Control: By preparing variance reports that compare budgeted costs to actual costs, an accountant can highlight areas of inefficiency, prompting management to take corrective action.
