Definition of Accounting
According to the American institute of Certified Public Accountants, Accounting is “The art of recording, classifying and summarising in a significant manner, in terms of money transactions and events which are in part at least of financial character and interpreting the results there of”
Functions/Features of Accounting
- Identifying the business transactions
- Measuring the transactions in terms of money
- Recording the transactions in journal entries
- Classifying the transactions
- Summarizing
- Analysing and Interpreting
- Communication
Difference between Bookkeeping and Accounting
| Bookkeeping | Accounting |
|---|---|
| It is just recording the transaction and has a narrow scope. | It has a broader scope which involves recording, classifying, summarising and interpreting the results. |
| Book keeping is the part of accounting. | It is the first stage of accounting |
| It follows the principle of Accounting. | It has its own set of principles. |
| It is a routine work. | It is complicated and specialized work |
What is Accountancy
It is a discipline, a branch of knowledge or a subject of study. It is a science which tells us how to maintain books of accounts, how to summarize and how to communicate the accounting information to outside whereas accounting is the actual work of maintaining accounts according to the rules laid down by Accountancy.
What does an Accountant Do?
Is a person who maintains books of Accounts. He is responsible for the proper working of accounting system in an organisation. He looks after the functions of recording transactions up to preparing final accounts and communicating the business results.
