Accounting is the recording, classifying and interpreting financial data relating to a particular organization or person. (Aspinall, 1990:37).
Accounting has one or more of the following objects
1. The maintenance of a classified records d cash debtors and other property, of creditors and of changes in them.
2. The maintenance of a record of transactions classified to show gains or losses resulting from the various activities.
3. The periodic preparation of statements summarizing the economic results of the activities and the financial position.
4. The use of such statements, by the management of an Undertaking to assist them in the conduct f its business by the proprietors to assist them in assessing the efficiency of the management and in determing policy with regards to further Investment and the withdrawal of profit, and by the government in determing tax liability.
The owners of any business naturally wishes to run their business as efficiently as possible in order to be able to do this, accounting information is kept. These accounting information enable the owner of the business to make Comparisons of the amount of each cost and each expense, it also services as a guide to business and financial decisions.
Accountants are responsible for preparing financial accounting information. Some of these accountant exercise their profession as the employees of Commercial Industrial and public practice of accountancy.
The financial accounting Information prepared by accountants are of quantitative nature because it is usually expressed in monetary terms, through non monetary information are also often contained in accounting reports.
The method and I or procedure for preparing financial accounting information are based upon definite principle which are usually rules and Conventions which have been adopted as a general guide to action by accountancy profession.
These principles are formulated in such away that he practical details of accounting may differ from one Company to another. However, in order to secure acceptance such an accounting principle must be useful in copying with a practical recording problems, it must be reasonably objectives that is provides a similar answer in the hands of qualifies practitioners, and it must be feasible and as such not expensive to apply. These accounting principles are known as generally accepted accounting principle (GAAP).
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