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What does “Accounting for Decision making” means to you and what are the possible applications in real life that you can think of?
“Accounting is the analysis and interpretation of book-keeping records. It includes not only the maintenance of accounting records but also the preparation of financial and economic information which involves the measurement of transactions and other events relating to the entity”.
Accounting is defined as "the art of recording, classifying and summarizing in terms of money transactions and events of financial character and interpreting the results thereof."
In simple words we can say that-
* Accounting is an art.......
* Of recording, classifying and summarizing.........
* In terms of money......
* Transactions and events of financial nature and
* Interpreting the results thereof.
Now a day’s accounting is regarded as a "service activity"
(Elliot, Barry & Elliot, Jamie: Financial accounting and reporting)
For example: - A transaction is an exchange in which each participant receives or sacrifices
Value (e.g. purchase of raw material). An event (whether internal or external) is a happening of consequence to an entity (e.g. use of raw material for production)
Objective of Accounting
“Objective of accounting may differ from business to business depending upon their specific requirements”. However, the following are the general objectives of accounting.
1. To keeping systematic record: “It is very difficult to remember all the business transactions that take place. Accounting serves this purpose of record keeping by promptly recording all the business transactions in the books of account”.
2. To ascertain the results of the operation: “Accounting helps in ascertaining result i.e., profit earned or loss suffered in business during a particular period”.
3. To ascertain the financial position of the business: “In addition to profit, a businessman must know his...
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