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what is accounting and its process?

 Definition of accounting 

"accounting is an art of recording, classifying and summarizing in a significant manner and in terms of money; transaction and event which are, in of a financial character, and interpreting the result thereof.


accounting is a systematic process of identifying, measuring, recording, classifying, summarizing, interpreting and communication of financial information. it ensure the proper use of the following;


1. to find available resources.

2. how the resources to be employed effectively.

3. results of the activity achieved.  


Characteristics of accounting  


1. identifying financial transaction 

  identification play an important role of accounting process it determine which accounting transaction and event ae to be recorded in books of accounts. the recording process contains only those transaction which are in financial nature as they bring changes in resources of the business or company.

2. measuring the identified financial transaction 

  
  The process of accounting records only those transaction and event in terms of a commonly used measurement unit i.e. currency of the country. for example; goods purchased for worth Rs. 12000 from a seller.

3. recording of the financial transaction and event 


  accounting is the art of recording financial transaction and event in the books of accounts. These transaction recorded in book called 'journal'. There are several books of accounts used to record those transaction in various books for different types of entries i.e. purchase book, sales book, cash book, etc.


4. classifying 


  The financial transaction and event after recording them classified into a book called "ledger". the objective of ledger book is to categories similar transaction at one place by opening ledger book. 
this book cover all the heads included in the journal and all subsidiary books at a one place. 


5. summarizing 


  Accounting is the power of  summarizing  financial transaction. This involves to present the classified data and information in the manner which is easily to understand and easily to interpret the result to its internal as well as external users. 

6. analysis and interpretation of data.


  The information and data summarized is analyzed and interpreted in manner that the users of the data can easily understand the concept and get meaningful information from it. By this feature the users able to understand the performance and financial position of the business.




             ACCOUNTING PROCESS










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