Meaning and objectives of accounting.

Meaning and objectives of accounting

According to American Institute of Certified Public accountants-“Accounting is an 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 “

According to Smith and Ashburne- “Accountancy is a the science  of recording and classifying business transactions and events, primarily of a financial character, and the art of making significant summaries, analysis and interpretations of those transactions and events and communicating the results  to persons who must make decisions or form judgement”.

Charactertics of accounting

1. Accounting is an art as well as science.
2. Recording of financial transactions only.
3. Recording in terms of money
4. classifying
5. summarizing
6. Interpretation of results
7. communicating

Objectives of accounting

1. To keep systematic record of business transaction
2. To calculate profit and loss
3. To know the exact reason of net  profit and net loss
4. To ascertain the financial position of the business.
5. To ascertain the progress of the business from year to year
6. To prevent and detect errors and frauds.
7. To provide information to various parties.

Functions of accounting

1. Maintaining complete and systematic records
2. Communicating the Financial results to various parties .
3. Protecting the assets of the business
4. Providing Assistance to Management
5. Trusteeship
6. Compliance of legal needs
7. Fixing responsibility

SHORT ANSWER QUESTIONS

1. Define Accounting.
2. What are the attributes of accounting?
3. What is accounting cycle?
4. “Only of financial transactions are recorded in Accountancy”. Explain the statement?
5. What is the meaning of “recording in terms of money”?
6. Explain the three objectives of accounting.
7. Give the difference between Book Keeping and Accounting on the basis of stage, special skills and nature of job.
8. What are the types of accounting?
9. Explain briefly any five advantages of accounting.
10. state any four limitations of accounting?
11. Explain any four qualitative characteristics of accounting information?
12. :”Non monetary transactions are not recorded in the books of account.” Explain.
13. “Accounting information should be comparable” Do you agree with this statement. Give two reasons.
14. Explain comparability as qualitative characteristics of accounting information.
15. “The role of accounting has changed over the period of time”. Explain.
16. What is the primary reason for business students and others to study accounting discipline?
17. Briefly appreciate the exact nature of accounting.
18. Identify the stakeholders who would be most interested in the following: (i) The ethical or environmental activities of the firm. (ii) whether the firm has long term future (iii) The ability of the firm to carry on providing quality products

.VERY SHORT ANSWER QUESTIONS 

1. What is meant by accounting?
2. Give any two objectives of accounting
3. how is the profit or loss of a particular period ascertained?
4. How do we ascertain the financial position of  the business?
5. Name the branch of commerce , which keeps a record of monetary transaction in s set of books.
6. Give one point of distinction between book keeping  and accountancy?
7. What is the end product of financial accounting?
8. Name any two users of accounting information?
9. Who are internal users of accounting information?
10. Who are external users of accounting information?
11. State the nature of information required by investors ?
12. What type of information is required  by long term lenders?
13. What are the information needs of the management?
14. Mention two advantages of accounting?
15. Write one limitation of accounting.
16. Which qualitative characteristics of accounting information requires the use of common unit and common format of reporting?
17. “Accounting information should be verifiable and free from personal bias”. Name the qualitative characteristics of accounting information denoted by this statement.
18. Meena is owner of a Restaurant. She paid son’s fee from her personal bank account Rs 20,000. Whether this constitute her Business transaction? Give reason.