Meaning of Accounting
the meaning of accounting may be define as the process of collecting,recording,summarizing and communicating financial information.According to The American Institute of Certified Public Accountans(AICPA),accounting is an art of recording,classifying and summarizing in an significant manner and in terms of money,transactions and event which are,in part at least,of a financial character and interpreting the result thereof’ note:source by modern accountancy
Bookkeeping- The Basis of account
Bookkeeping is an activity concerned with the recording of financial data relating to business operations in a significant and orderly manner.Bookkeping is the record-making phase of accounting.Accounting is based on a careful and efficient bookkeeping system..
The main objectives of bookkeeping are:
1.To have a permanent record of each transaction of the business and to show its financial effect on the business.
2.To ascertain the combined effect on all the transactions made during an accounting period upon the financial position at the business a whole.
It is important to say that bookkeeping should not be confused with accounting .Person with little knowledge of accounting may fail to understand the difference between bookkeeping and accounting.The main distinction between the two is that where bookkeeping is the recording phase,accounting is concerned with the summarizing phase of an accounting system.
Functions of accounting
Accounting to moonitz,the functions of accounting are:
1.To manage the resources held by specific entities;
2.To reflect the claims against and the interests in those entities;
3.To measure the changes in those resources,claims and intfrests;
4.To assign the changes specifiable periods of time;and,
5.To express the above in terms of money as a common denominator
Objectives of accounting
These include providing reliable information about:
1.changes in financial position resulting from the income- producing efforts of an enterprise;
2.earning of a enterprise,presented in a manner that emphasizes sources and trends of earning;
3.Economic resources and obligations of an enterprise;
4.Changes in net financial resources which result from the financial and envestment activities of an enterprise;and
5.any additional information,in the form of disclosures,which is relevant to statement users is assessing a particular enterprise’s prospects;
