The Role of Accounting in a Planned Economy

Abstract

The basic problem facing any economy is that of determining the allocation of the scarce resources so that they will go as far as possible towards satisfying society's ever increasing wants or needs. The allocational tasks might be simpler in a primitive society where the needs are limited, the means available are scanty, and the range of choices is narrow and less complicated. However, as an economy progresses and becomes more advanced, concern with scarcity relations deepens and the need for a system of economic information becomes eminent in order to make any proper decisions concerning the allocation of resources. This is where the function of accounting could be appreciated.
Accounting is broadly defined as a process of measurement and communication of economic information needed for the proper allocation of society's resources and the efficient conduct of its economic activities. As a measurement process, accounting attempt to assign quantitative measures to economic properties and events. It is the concept of value that accounting actually attempts to quantify. Value does not need to be measured when it is dealt with only as a theoretic a concept. But when dealing with this concept in terms of production and distribution of noods and services, the quantification proses becomes necessary.