Nature & Scope Of Accounting

Nature & Scope of Accounts in everyday life

Introduction Everyday we, generally, exchange money and goods in our private and family life and also in institutions. These acts of giving and taking result in monetary changes to respective parties in every

Meaning of accounting • DEFINITION:American Accounting Association defines,” Accounting refers to the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the

History of Accounting

• At the stone age period the people used to keep record of their preyed beasts and collected fruits and roots by drawing lines on the stones inside the cave, snatching on the bark of trees or making knots with the help of creepers.

• When they began living in the society, they started to keep record of their produced crop by marking off on the wall of their houses and making knots with the help of the ropes.

• After the introduction of money as a

medium of exchange, the monetary activities of man further expanded. Professional merchant class emerged and trading started. With this writing accounts of all total purchase, sales, assets and liabilities started. • Modern accounting (15th century)

Scope of Accounting

• Scope is very wide • Needed not only by business class but also by non-business class. • Financial activities of professionals including doctors, engineers and lawyers.

OBJECTS OF ACCOUNTING • Proper recording of transactions • Determination of results • Ascertain of financial position • Supplying of financial information • Defalcation prevented

Accounting principles • Entity concept • Accrual concept • Going concern concept • Revenue concept • Realization concept

Necessity and importance of accounting • Institutional necessity • In day-to-day life