Question

what is accounting ? I want in numeric defintion. Please write only if you know. otherwise please pass to other expert. If it is wrrong i will downvote . Plase dont copy pas chegg answers

Answer 1

The Committe on Terminology set up by the American Institute of Certified Public Accountants formulated the following definition of accounting:-

"Accounting is the art of recording, classifying, and summarising in a significant manner and in terms of money, transactions and events which are of financial character, and interpreting the result thereof"

As per this definition, accounting is simply an art of record keeping. The process of accounting starts by identifying the events and transactions the events and transactions which are of financial character and then be recorded in the books of account. Measurement in terms of money means measuring at the ruling currency of a country, for example, rupee in India, dollar in U.S.A. and like. Accounting also interprets the recorded,classified and summarised transactions and events. However the above mentioned definition does not reflect the present day accounting function. According to the above definition, accounting ends with the interpretation of the results of financial transactions and events but in modern world with the diversification of management, ownership,globalisation of business and society gaining more interest in the functioning of the enterprises, definition of accounting is widely accepted:-

"The functioning of accounting is to provide quantitative information, primarily of financial nature, about economic entities, that is needed to be useful in economic decisions"

Thus, the accounting may be defined as the process of recording, classifying, summarising,analysing, and interpreting the financial transactions and communicating the results thereof to the persons interested in such information"

Numerical Definition

Let take example that Mr. A has started the business with capital introduction of $100000. He purchased goods for the business worth $150000. He sold goods worth $200000 and left with closing stock of $50000. Mr. A bring asset which he had used for his personal use.0-$150000=$100000.

The accounting is simply identifying the transactions which are monetary in nature in simple terms. In above example, purchase of goods and sale of goods are monetary transactions, hence will be accounted for purposes of accounting. But asset brought to business after using for personal purposes is not accounted for since it does not involve any cash flow.