- To enable the trader know whether he has made profits or losses.
- To enable the trader know the amount of capital invested in the business.
- To enable the trader know the financial position of his business as at a given date.
- To enable the trader know whether his business is progressing or declining through comparing the accounting records of the present period and the records of the previous accounting period.
- To enable the trader anticipate fairly the future demand for his products thus enabling him to stock accordingly.
- To enable the trader control the costs effectively hence maximizing profits.
- To enable the trader keep a track record of his debtors and creditors.
- To guide management in developing future financial plans and policies for the business.
- To provide accurate data to the investors who may wish to know the financial status of the firm before making a decision to purchase it.