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  • Introduction To Accounting: Need & Importance

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    Joji Isac P
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    Accounting is referred to as the "language of business" as it uses technical terms like liability, asset, debt, and loans. It involves recording, classifying, and summarizing financial transactions and events in a meaningful way using money amounts. While bookkeeping and accounting are sometimes used interchangeably, accounting has a broader scope as it converts business transactions into financial statements using accounting principles for users like investors, lenders, and managers.

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    Introduction to Accounting

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    Accounting is referred to as the "language of business" as it uses technical terms like liability, asset, debt, and loans. It involves recording, classifying, and summarizing financial transactions and events in a meaningful way using money amounts. While bookkeeping and accounting are sometimes used interchangeably, accounting has a broader scope as it converts business transactions into financial statements using accounting principles for users like investors, lenders, and managers.

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    15 views7 pages

    Introduction To Accounting: Need & Importance

    Uploaded by

    Joji Isac P
    Accounting is referred to as the "language of business" as it uses technical terms like liability, asset, debt, and loans. It involves recording, classifying, and summarizing financial transactions and events in a meaningful way using money amounts. While bookkeeping and accounting are sometimes used interchangeably, accounting has a broader scope as it converts business transactions into financial statements using accounting principles for users like investors, lenders, and managers.

    Copyright:

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    Introduction to Accounting

    Need & Importance

    Accounting as a Language

    Accounting is commonly referred to as the language of business. Important to be familiar with certain basic accounting concepts & conventions. Words & terms used in accounting are understood in their proper technical sense.

    Examples of accounting words used in everyday parlance

    Liability Asset Debt Loans Cash

    How does Accounting accomplish this?

    Best understood by the commonly accepted definition of accounting. Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money transactions and events which are in part at least of financial character and interpreting the results thereof.

    Book Keeping and Accounting

    Sometimes used synonymously though they are substantially different in nature. Book keeping is an activity complementary to the accounting process. Accounting has a much more extensive scope.

    An oft quoted American Accounting Association states that essentially accounting is an information system. A system converts inputs to outputs.

    Accounting System
    Business transactions

    Inputs

    Accounting principles

    Processing

    Financial statements

    Outputs

    Investors,lenders,managers

    users

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