ICSE Class 9 Answered

Meaning of Accounting

Accounting is a system which collects and processes financial information of the business. This information is useful for the users to make appropriate decisions. American Accounting Association defines accounting as ‘the process of identifying, measuring and communicating economic information to permit informed judgments and decision by users of the information”.

Objectives of accounting

• It maintains a systematic record of all financial transactions in book of accounts
• It gives an idea about the net results of the business operation, periodically. The owner of business organisation can ascertain the profit earned or loss incurred during an accounting period.
• It helps to ascertain the financial position of the business in terms of assets and liabilities at every accounting period
• It provides information to the users in the form of reports, statements, graphs and charts