ACC 200L- Accounting

The main purpose of accounting is to ascertain profit or loss during a specified period, to show the financial condition of the business on a particular date and to have control over the firm's property. Such accounting records are required to be maintained to measure the income of the business and communicate the information so that it may be used by managers, owners and other interested parties. Accounting is a discipline which records, classifies, summarises and interprets financial information about the activities of a concern so that intelligent decisions can be made about the concern. The American Institute of Certified Public Accountants has defined the Financial Accounting as "the art of recording, classifying and summarising in as significant manner and in terms of money transactions and events which in part, at least of a financial character, and interpreting the results thereof". American Accounting Association defines accounting as "the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information. From the above the following attributes of accounting emerge : (i) Recording : It is concerned with the recording of financial transactions in an orderly manner, soon after their occurrence In the proper books of accounts. (ii) Classifying : It Is concerned with the systematic analysis of the recorded data so as to accumulate the transactions of similar type at one place. This function is performed by maintaining the ledger in which different accounts are opened to which related transactions are posted. (iii) Summarising : It is concerned with the preparation and presentation of the classified data in a manner useful to the users. This function involves the 5 preparation of financial statements such as Income Statement, Balance Sheet, Statement of Changes in Financial Position, Statement of Cash Flow, Statement of Value Added.