Accounting is a major means of helping managers of an organization, equity investors of an organization, potential equity investors, creditors and bond holders of an organization, potential creditors and bond holders of an organization, suppliers and customers of an organization and other stake holders to take decisions.
Accounting provides information for three major purposes:
1. External reporting: These reports are used investors, creditors, government authorities, and other outside parties.
2. Routine internal reporting: These reports which are periodically generated are used by managers of the company for their internal decisions.
3. Nonroutine internal reporting: This information or reports are generated to support projects and other decisions that come up as the need arises from them.
While the reports are prepared in different formats and basic data is manipulated or summarized in various ways to facilitate decision making, there is one data base maintained by the accounting system that contains data in the form debits and credits to various accounts maintained in the accounting system. Accountants combine these data items in various ways to provide information to internal or external users.

Accounting systems are designed mainly to provide information that managers and outsiders can use in decision making. They also serve other purposes: to produce operating documents, to protect the company’s assets, to provide data for company tax returns, and, in some cases, to provide the basis for reimbursement of costs by clients or customers.

The accounting organization is responsible for preparing documents that contain instructions for a variety of tasks, such as payment of customer bills or preparing employee payrolls. It prepares confidential documents, such as records of employees’ salaries and wages

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The purpose of accounting is to provide the information that is needed for sound economic decision making. The main purpose of financial accounting is to prepare financial reports that provide information about a firm's performance to external parties such as investors, creditors, and tax authorities. Managerial accounting contrasts with financial accounting in that managerial accounting is for internal decision making and does not have to follow any rules issued by standard-setting bodies. Financial accounting, on the other hand, is performed according to Generally Accepted Accounting Principles (GAAP) guidelines.

The purpose of the accounting system is to keep the track of transactions and recording revenue and expenses of the company. It helps in recording, analyzing and retrieving the financial data. On the basis of financial status and financial reports important decisions of the company are made. The basic purpose of accounting system
is the identification of all the activities which may impact the companies financially. These activities include purchases, sales, investments made and loan lending etc. Moreover, accounting system also provides a proper way to the companies for the monitoring and handling financial data like all data is arranged in journal entries and ledger. This also increases the internal check on the organizations.

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