Accounting Essay

Accounting Essay-74
Being scientific in character, double-entry principle of accounting has definite objectives to fulfill.It prescribes the process through which the objectives can be achieved. In its micro system it includes several branches in the form of Financial Accounting, Cost and Management Accounting and others such as Government Accounting, HR Accounting, Inflation Accounting, Environmental Accounting, Farm Accounting, etc.

Being scientific in character, double-entry principle of accounting has definite objectives to fulfill.It prescribes the process through which the objectives can be achieved. In its micro system it includes several branches in the form of Financial Accounting, Cost and Management Accounting and others such as Government Accounting, HR Accounting, Inflation Accounting, Environmental Accounting, Farm Accounting, etc.

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The major objective of this function is to report at regular intervals to owners/shareholders, management and other interested parties in a desired form and format through financial statements.

The major purpose of this function is to maximize operational efficiency.

Though the original records are maintained in a systematic way, they cannot by themselves provide information for judgement (decision) unless they are analysed and interpreted. Examining the cited definitions, we can infer that book-keeping is concerned with recording aspect.

On the other hand, being comprehensive in nature, accounting includes book-keeping and spreads its tentacles to the analysis and interpretation of the data recorded.

The importance of accounting can be understood in the popular use of this systematic information by the interested parties (i.e., the data processed in the form and format meaningful to the user).

This systematic information is used by interested persons for decision making.

Today, we observe several million individuals engaged in professional accounting activities and several billions dependent on such information.

Thus, accounting has a wide scope in the spectrum of economic and social development of any country, be it developed, developing or backward.

Trading Account and Profit and Loss Account are prepared to ascertain the profits earned or losses incurred for a particular period.

The balance sheet shows the financial position of a business as at a particular point of time. They are information specialists who collect, process and report economic information about specific financial events for business and non-business activities.

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