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What Is Accounting

What is accounting

Accounting is moving away from its traditional procedural base, encompassing record keeping and such related work as the preparation of budget and final account, towards a role that emphasized its social importance.

In 1953 Littleton defines accounting that ‘the central purpose of accounting is to make possible the periodic matching of costs and revenues.’

American institute of certified of certified Public Accounts (AICPA) defines accounting as ‘the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and event which are, in part at least, of financial character, and interpreting the result thereof’.

The modern account is concerned not only with record keeping but also with a whole rang of activities involving planning and problem solving; control and attention directing; and evaluation, review and auditing. That is the new focus of accounting is on the ultimate needs of those who use accounting information, whether these uses are inside or outside the business itself. So accounting ‘is not an end itself’ but must be viewed as an information system that measures, processes and communicates financial information about an identifiable entity.

American accounting association (AAA) extends the scope of accounting in that way that is to provide information which is potentially useful of make economic decisions and which if provided, will enhance social welfare.

Finally, accounting is a decision-oriented science, which deals with reporting of relevant financial to the users for making the right decision in the right time. Accounting now a days also focuses on reporting of non-financial issues such as environmental issues, corporate governance etc.

Philadelphia Textile Mills Ltd. in its annual report 2002 mentions about environmental issues like:

“A testimony to your company’s concern for environment is its co-generation plant which uses exhaust of gas engine-generators to generate steam for the chilling unit. This reduces pollution of air while saving on the cost of air conditioning.”

 

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