Accounting Definition and It's Importance

What is Accounting?

       Accounting is the process of recording and reporting business transactions and events as a basis in making economic decisions.

             Accounting is also a profession consisting of individuals having the formal education to carry out these tasks. It is very important that they know very well the process in order to maintain the accuracy and efficiency of the business organization.

           According to Committee on Accounting Terminology of the American Institute of Certified Public Accountants (AICPA), accounting is the art of recording, classifying and summarizing in a significant manner and in the terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof.

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-What is Accounting?    

What is the importance of Accounting?

                  Accounting is very important in our day to day living. Sometimes, we don’t recognize that we are already performing accounting operations. For example, when we go to the market to buy our food, we already performing budgeting which is part of accounting process. So, it means that it is not only in business that we do accounting operation but even in our daily life.

                    Accounting is very important in business operations especially in making reports by those whose decisions are influenced by market forces such as managers, investors, creditors and suppliers and by those that regulate the market such as concerned government agencies and privately-organized accrediting organizations. It may help to present the status of the business. It helps to discover easier the internal problems that the business is facing. So, with that it can help also to be able to find a solution and ways in order to solve and overcome it.

References:

• (Franklin Agamata; Berbano; Buado, 2014; Fundamentals of Accounting p.20)