MEANING OF ACCOUNTING

MEANING OF ACCOUNTING

Accounting is an information science that identifies, records and process financial transactions of an organization or individual to prepare financial reports, commonly known as financial statements, for the interested users. It is a comprehensive and systematic system of recording and reporting of financial data. Wikipedia defines accounting as- accountancy*, or accounting, is the production of information about an enterprise and the transmission of that information from people who have it to those who need it.1 It is also says that, accounting is an overall process of identifying, measuring, recording, interpreting, and communicating the results of economic activity; tracking business income and expenses and using these numbers to answer specific questions about the financial and tax status of the business. Person engaged in accounting profession is called an accountant.

N O T E

The word "Accounting" is an American English

and the word "Accountancy" is a British English

Various accounting institutions and famous accountants have given a set of nice definition of accounting. Some of them are as follows-

• Weygandt, Kieso and Kimmel- ‘Accounting is an information system that identifies, records, and communicates the economic events of an organization to interested users.’4

Identifying economic events involves selecting the economic activities relevant to a particular organization.

1. Recording consists of keeping a systematic, chronological diary of events, measured in money. In recording, economic events are also classified and summarized.
2. The identifying and recording activities are of little use unless the information is communicated to interested users. 
3. Financial information is communicated through accounting reports, the most common of which are called financial statements.

• American Institute of Certified Public Accountants [AICPA] in 1953- ‘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 a financial character and interpreting the results thereof.’ 2 In 1970 the organization define accounting again as-‘Accounting is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.’ 3
• Financial Accounting Standard Board (FASB)- ‘Accounting is the service activity of financial recording and reporting.’
• American Accounting Association [AAA] – ‘Accounting is defined as the process of identifying, measuring, and communicating economic information to permit informed judgments, and decisions by users of the information.’

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1. http://en.wikipedia.org/wiki/Accounting
2. Accounting Terminology Bulletin No-2, New York: Committee on Accounting Terminology 1953 - P9
3. New York: Statement of Accounting Principles, Board No-4, 1970.
4. 6^th Edition, page No-02