BASIC ACCOUNTING
Meaning of accounting-
Accounting is a systematic process of recording, classifying, summarizing and interpreting
the
financial transactions and communicates results to users.
USERS:
Owners ,Creditors ,financial Institutions, Employees ,Government etc.
Key Points:
Records only monetary transactions
Helps in decision- making
Shows financial position of business
Example:
Purchase of goods for ₹10,000 is recorded in accounting books.
⭐ Exam Tip: Always write the words systematic and monetary transactions to score full
marks.
objectives of accounting :-
1. Maintaining Accounting Records
2. Determining Profit and Loss
3. Determining Financial Position
1|P a g e
, 4. Facilitating Management
5. Providing Accounting Information To Users
functions of accounting
1. It helps communicating information to internal or external users.
2. It is a systematic record accepted as evidence in court.
3. It helps management take decisions on the basis of financial information given by
accounting records.
LiMitations of accounting
1. Accounting ignores qualitative elements like skills,public relations and includes only
monetary aspects.
2. Accounting may leads to window dressing by manipulating accounts by showing better
position of financial statements than what actually it is.
2|P a g e
Meaning of accounting-
Accounting is a systematic process of recording, classifying, summarizing and interpreting
the
financial transactions and communicates results to users.
USERS:
Owners ,Creditors ,financial Institutions, Employees ,Government etc.
Key Points:
Records only monetary transactions
Helps in decision- making
Shows financial position of business
Example:
Purchase of goods for ₹10,000 is recorded in accounting books.
⭐ Exam Tip: Always write the words systematic and monetary transactions to score full
marks.
objectives of accounting :-
1. Maintaining Accounting Records
2. Determining Profit and Loss
3. Determining Financial Position
1|P a g e
, 4. Facilitating Management
5. Providing Accounting Information To Users
functions of accounting
1. It helps communicating information to internal or external users.
2. It is a systematic record accepted as evidence in court.
3. It helps management take decisions on the basis of financial information given by
accounting records.
LiMitations of accounting
1. Accounting ignores qualitative elements like skills,public relations and includes only
monetary aspects.
2. Accounting may leads to window dressing by manipulating accounts by showing better
position of financial statements than what actually it is.
2|P a g e
