Introduction To Accounting Concepts And Techniques

Hello

As this is my first blog relating to accounting terms and techniques i would try my best and give the most precise point of view and explanation on accounting theories. Starting with the basics the first question that comes to the mind about accounting is firstly

• What exactly is Accounting?
• When and how it became a method of learning?
• What are its use?
• How can we benefit from it?

All these answers are pretty basic and are essential for ones understanding for the subject.
Starting from the first Q.

• What exactly is Accounting?

Accounting is basically the bookkeeping methods which are involved in making a financial record of business transactions
(such as Purchase, Sale, Lending And Borrowing Of Loan. etc)
and in the preparation of statements concerning the assets, liabilities and operating result of a business.

Accounting is defined by the
"AICPA"(American Institute Of Certified Public Accountants) as

"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 financial character, and interpreting the results."

In another terminology Accounting can be referred as the art of communicating financial information business entity to the users such as managers, directors, executives and shareholders.The information communicated is generally in a form of financial statement in monetary terms.

"It is also considered as a branch of mathematical science that is essential in discovering the success and failure of a business."

Accounting is a branch of mathematical science that is useful in discovering the causes of success and failure in business . The principles of accountancy are applied to business entities in three aspects namely

• accounting
• bookkeeping
• auditing

Nowadays Accounting is considered "the language of business" because it is the essential and vital factor for communicating between different users or businesses .

The Field of Accounting that concentrates on reporting to people inside the business entity is called Management accounting and is used to provide information to employees, managers, and auditors. Management accounting is concerned primarily with providing a basis for making management or operating decisions.


The Field of Accounting that provides information to the users outside the business entity is called Financial accounting and provides information to present and potential shareholders, creditors such as banks or vendors,financial analysts , economists , and government agencies.