Meaning of Accounting
Accounting refers to the process by which financial information is identified, measured, and communicated by users of the information to approve informed judgments and decisions.
Accounting is also known as an information system, which identifies, records, and communicates an organization’s financial information to interested users.
Accounting is the art of recording an organization’s financial data, classifying, reporting, and interpreting it. Accounting can be described methodically as the art and science of business recording to show
- A company’s real state of affairs at a specific point in time, and
- The surplus or deficiency that has accrued over a particular period.
Now, we can say that accounting is the art of recording financial transactions and events scientifically in the books of accounts, as well as of determining the financial results and the financial position, and of preparing informative reports based on the financial results and the financial position of the persons concerned.
Therefore, Accounting includes the following activities:
- Recording financial transactions and events.
- Preparation of statements/accounts after classification and consideration of financial transactions and events.
- Identifying financial results and economic conditions based on financial transactions and events.
- Preparation of reports based on the financial results and the financial position determined.
You may also read:
- What are the functions of Accounting?
- Bookkeeping vs Accounting
- What is the meaning of bookkeeping in accounting?
