What is Accounting?

What is Accounting?

 

Definition:

                          Accounting is an information system   for measuring, processing and communicating information that is useful in making economic decisions.

         Accounting provides the techniques for gathering and communicating economic to different individuals and institutions. The “Raw Materials” of

         Accounting are composed of business transaction data. Its “primary finished products” are composed of various summaries, analyses and reports.

  

Accounting has been defined broadly as:

“The process of identifying, measuring and communicating economic information to permit informed judgement and decisions by users of business information.”

 

Users of Accounting:

the major reason for studying accounting is to acquire relevant knowledge and skills to participate in important economic decisions.

All Government and Private agencies rely on accounting data evaluating tile efficiency of operations and for appraising the feasibility of purposed taxation and spending measures. Thus, every adult engaged in business transactions must necessarily be concerned with the financial aspects of life.

 Accounting as a provider of Information to users to illustrated in the following diagram.

 

 

 

 

 

Objective:

The objective of accounting is that all transactions relating to business be recorded in such a way that owner or firm of the company may at any time know the position of expenses, income, profits, losses, assets and various liabilities etc. These Points are tackled in accountancy by means of systematic recording of business truncations.

In conclusion,

Accounting can be termed to be a tool used for providing information that is useful in making reasonable choices among alternative uses of scares resources in the conduct of business and economic activities to maximize profits.