Accounting – Meaning, Definition, Types, Objectives, History

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What is Accounting ?

Accounting is the process of systematically recording, measuring, and communicating information about financial transactions. It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm’s assets, liabilities and owners’ equity.

Accounting Dictionary Meaning

Accounting Dictionary meaning is the process or work of keeping financial accounts.

Meaning 2 : the theory and system of setting up, maintaining, and auditing the books of a firm; art of analyzing the financial position and operating results of a business house from a study of its sales, purchases, overhead, etc.

Meaning 3 : a detailed report of the financial state or transactions of a person or entity:

Meaning 4 : Practice and body of knowledge concerned primarily with

  • methods for recording transactions,
  • keeping financial records,
  • performing internal audits,
  • reporting and analyzing financial information to the management, and
  • advising on taxation matters.

Accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information.

Types of Accounting

There are several types of accounting that range from auditing to the preparation of tax returns. Accountants tend to specialize in one of these fields, which leads to the different career tracks noted below:

  • Financial Accounting
  • Public Accounting
  • Government Accounting
  • Management Accounting
  • Auditing
  • Tax Accounting
  • Forensic Accounting

Who is Accountant

An accountant is a practitioner of accounting or accountancy, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resource(s). An Accountant is one who is skilled in keeping accounts and books of accounts correctly and properly.  Accountant, design and control the systems of accounts required for records of various transactions of business, trade, and finance.

Different Types Of Accountants

Different types of accountants include:

  • Auditors
  • Forensic accountants
  • Public accountants
  • Tax professional
  • Financial advisor
  • Consultants

Accounting History

This field was established by the Italian mathematician Luca Pacioli who in 1494 first described the system of double-entry bookkeeping used by Venetian merchants in his “Summa de Arithmetica, Geometria, Proportioni et Proportionalita.” Accounting, which has been called the “language of business”, measures the results of an organization’s economic activities and conveys this information to a variety of users, including investors, creditors, management, and regulators.Practitioners of accounting are known as accountants. The terms “accounting” and “financial reporting” are often used as synonyms.

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