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Definition and Objectives of Accounting:
 
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Definition: Accounting has been defined by the American Accounting Association Committee as: “Accounting is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information”.

The American Institute of Certified and Public Accountants Committee on Terminology defined accounting as: “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”.

Another popular definition on accounting was given by American Accounting Principles Board in 1970, which defined it as: “Accounting is a service society. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is useful in making economic decision, in making reasoned choices among alternative courses of action”.

Accounting is called the language of business. This designation is applied to accounting because it is the method of communicating business information. The function of any language is to serve as a medium of communication. Accounting duly serves this function. Like any other language, it is undergoing continuous change in an attempt to discover better means of communications. To enable the accounting language to convey the same meaning to all people it should be made standard. To make it a standard language certain accounting principles, concepts and standards have been developed over a period of time. This lesson dwells upon the different dimensions of accounting, accounting concepts, accounting principles and the accounting standards.

 

Objectives of Accounting: The main objectives of accounting is to

          Know about the history and evolution of accounting

          Understand the definition of accounting

          Comprehend the scope and function of accounting

          Ascertain the users of accounting information

          Know the specialized accounting fields

          Understand the accounting concepts and conventions

          Realize the need for accounting standards

 

 

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