Meaning of Accounting:
According to American Institute of Certified Public Accountants meaning (Definition) of accounting is as follows:
“Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transaction and events which are, in part at least , of a financial character and interpreting the results thereof”
Main Branches of Accounting
There are three main branches of accounting i.e. Management Accounting, Financial Accounting & Cost Accounting .
Users of Accounting Information
Accounting is used by the business organizations for keeping the records of money and business transactions. People who are interested to know about the accounting information are
- Shareholders: They use this information to know about the real position of their organization.
- Managers: As managers are answerable to owners, because of that they are more worried about it.
- Investors: Investors are interested to know about the financial position of the business to get good return.
- Creditors: Bankers and other financial institutions would like to be satisfied as they will be paid on time.
- Government: Government is interested for taxation purpose.
- Employees: As the timely payment & bonus of employees depends on the amount of profit earned by the company.
- Regulatory Bodies , Researchers & Customers
Characteristics of Accounting Information:
- Accounting Information should be Relevance so that it could influence the decisions of users by helping them to evaluate the actions.
- It should be Reliable; it means it should be factual and free from errors and biasness.
- Comparability : It should be comparable with the similar information of other organization
- Timeliness: It should be made available to its users on time without any delay.
- Verifiability: Truthfulness should be present in the recorded transactions.
- Completeness : It should be contain complete information for all users of Accounting