Nature of accounting and the accounting
Cost accounting embodies the analysis and synthesis of cost in such a manner that it is possible to disclose the total cost of production of a commodity or a service, vis-a-vis the analysis of the cost elements in terms of material, labour and overhead costs. Accounting may be defined as the identifying, measuring, recording and communicating of financial information.
It is technical in nature.
Functions of accounting
The purpose is to supply reliable and dependable information about the economic chronicles of the business for the purpose of decision making by the interested parties. Accounting is identified as a process as it performs the specific task of collecting, processing and communicating financial information. Classifying: It is the process of posting of entries in the ledger so that transaction of similar type are accumulated at one place. Definition of Accounting : American Institute of Certified Public Accountants AICPA defined accounting in as follows : Accounting is the art of recording, classifying and sum marising , in a significant manner, and in terms of money, transactions and events which are, in part at least of a financial character, and interpreting the results thereof Accounting Principles Board APB defined following words. Nature and Scope of Financial Accounting: The nature and scope. No answer to these questions. Accounting is an information system: Accounting is recognized and characterized as a storehouse of information.
Shares may be held by individuals or companies or corporations or even the government. So, from starting to the end, at every stage, accounting deals with financial information. Limitations of Accounting Although a wider scope for accounting has been envisaged above, conventional accounting is beset with a number of limitations.
Historical cost is sometimes found useful but it is insufficient for evaluation of current business decisions. Social accounting has been defined by Seidler and Seidler as The modification and application by accountants, of the skills, techniques and discipline of conventional Accounting to the analysis and solution of problems of a social nature.
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