Definition and objectives of accounting and accounting systems

May 24, 2018 | By admin4u | Filed in: Uncategorized.

Accounting can be defined as "recording, classifying and summarizing financial transactions and financial events and understanding their results". In the simplest terms we can say:

(1) Accounting is the result of the interpretation and summary of

(19659002) (19659002) (2) and

(5)

Accounting is the right business transactions Register of Business: The science of keeping business records systematically and systematically, business results are minimal in trouble. Therefore, it is said that a statistical procedure for collecting, classifying and summarizing financial information

Accounting Goals

Accounting objectives are double:

(1) Record all business transactions permanently and

(2) Demonstrate the impact of each transaction and the impact of all such transactions on a given period in order to determine the profits or losses of a business and, at any given time, know its correct financial position.

The necessity and significance of bookkeeping can be understood by answering the following questions:

(1) How much did we get this year?

2) How much did you win last year?

(3) Does our business develop?

(4) How Much Money Is

(5) How Much We Pay?

(6) How Much Does It Take For Us?

Accounting systems

These different recording systems are used to maintain business records:

Accounting Cash

This system records only cash deposits and payments, there are no credit transactions. If there are any credit transactions at all, they are not recorded at all until the cash is actually paid or not received. The best example of the payment system is clubs, societies, hospitals, educational institutions, lawyers, etc. The revenues.

Single Entry System

This system ignores the duplication of each transaction as it is tested in a dual entry system. Under an introductory system, the purely personal aspects of the transaction, that is, the personal accounts are recorded. This method does not take into account non-personal aspects of transactions such as cash. It does not provide checks on mission accuracy and fraud protection as it does not provide checks to capture cash transactions. This is why it is called "imperfect accounting".

The Double Entry System

The dual entry system was first created by Luca Pacioli, who was an Italian Franciscan monk. Over time, the system has undergone many stages of development. This is the only method that meets all the objectives of regular accounting. It acknowledges the duplicate aspects of each business transaction.

These issues are crucial to the trader, and answers can only come from up-to-date financial records. Only a perfect record of all business transactions can help the owner know the amount he has earned or lost.

The ultimate goal of every business is to achieve maximum profit at minimal cost. Based on these, the trading organization is always trying to expand its business, increase its sales and reduce operating costs. Progress is always indicated only by the properly maintained financial records. In the beginning, the main purpose of accounting was to establish the business outcome (whether gained or lost) over a year, and presents the financial position of the business as at a given time. Accounting must meet the requirements of tax authorities; investors, government regulations; management and owners. This has resulted in an extension of the scope of its accounting and can be defined as follows:

"Accounting for cash flow and events that at least partially capture, classify, and summarize are material and interpret the result." [19659002] In simple words, science finds the cause-effect relationship, while art is the application of knowledge which includes some accepted theories, principles and rules. Since accounting documents do not cause any causal link, it only provides us with the method by which accounting goals can be achieved, therefore accounting is art and not science. Accounting is the art of registering financial transactions in a book suite; categorize and summarize the information to be presented to the interested parties in their interest.

The scope of the bookkeeping

The need for an accounting system is an early history of trade and commerce. The art of bookkeeping is as old as art of commerce. This art of records has been going through many phases since the beginning. The development of trade has played a significant role. Indeed, it can be said that the basis for accounting is based on the whole structure of modem trading.

Although the ordinary trader has no legal obligation to keep records, each business house is essential and convenient to keep systematic records in mind to know exactly where it is. In addition, it legally compels certain business forms, such as public limited companies, to regularly record in the appropriate form of business premises. Appropriate and satisfactory accounting methods are an essential part of any business house for the following reasons:

(1) If there is no record, it may be difficult to establish a precise net profit. In such circumstances, tax authorities may overestimate the profits and so the trader will suffer from business records.

(2) In the absence of appropriate business records, the trader may find it difficult to submit a true position in the

(3) Keeping proper records helps the trader develop future business plans and policies. [4] It is hard to judge and fix the price of a shop for sale or sale if there is no record [5] Finally, despite the best memory, the trader has the ability to remember all business relationships with the back references

Source by Anil Kumar Gupta


Leave a Reply

Your email address will not be published. Required fields are marked *