Question

Define Accounting. Explain the accounting concepts which guide the accountant at the recording stage.

Answer 1

Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business. Accounting also refers to the process of summarizing, analyzing and reporting these transactions. The financial statements that summarize a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period. The accounting concepts which guide the accountant at the recording stage are: Business Entity Concept Money Measurement Concept Historical Record Concept Objective Evidence Concept Cost Concept Dual Aspect concept