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Accounting operates within a broad socio-economic environment, and so, the knowledge required of the accountant cannot be sharply compartmentalized.It is therefore, difficult to discuss one area without relating to other areas of knowledge. We place a great emphasis on the conceptual knowledge. The accountant should not only know but he should understand.
From the above it is clear that to define accounting as such, is rather difficult. Many accountants have defined Accounting in very many languages. However, we can consider the following definitions:
1.H.Chakravorty: “Accountancy is the science of recording, classifying and summarizing transactions so that relation with outsiders is exactly determined and result of operation during a particular period can be calculated, and the financial position as the end of the period may be shown.
2.A.I.C.P.A.: "Accountancy may be defined as the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events, which are in part, at least of financial character, and interpreting the results thereof".
3.Taylor and Shearing: "Accounting may be defined as the art and science of recording business transactions in a methodological manner so as to show: (a) the true state of affairs of a business of a particular period of time and, (b) the surplus or deficiency which has accrued during a specific period."
From the above definition, we can say that accounting helps us to have some information regarding the following:
1.The nature and amount of incomes.
2.The nature and amounts of expenses.
3.The nature and amounts of possible losses.
4.The nature and amounts of actual losses.
5.The size and volume of capital employed.
6.The increase or decrease in the volume of capital employed.
7.The nature and values of assets owned.
8.The nature and values of liabilities outstanding.
9.The specific amounts due to the business and their nature.
10.The specific amounts due to the business and their nature.
11.The specific amounts due to be paid to the government and their nature.
12.The reports regarding the interpretations of the financial results.
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Objectives of Accounting
The broad objects of Accounting may be briefly stated follows:
1.To maintain the cash accounts through the Cash Book and to find out the Cash balance on any particular day.
2.To maintain various other Journals for recording day-to –day non –cash transactions.
3.To maintain various Ledger Accounts to find out the exact amounts of incomes and expenses or gain and losses or receivables and payables.
4.To furnish information regarding Purchases and Sales, both Cash and Credit.
5.To find out the net profit or net loss or surplus or deficit for any particular period.
6.To find out the total capital on a particular date.
7.To find out the positions of assets on a particular date.
8.To find out the position of liabilities on a particular date.
9.To detect any defalcations and to check the frauds and misappropriations of money.
10.To detect the various errors and to rectify those through entries in the journal proper.
11.To confirm about the arithmetical accuracy of the books of accounts.
12.To help the management by supplying accounting ratios, reports and relevant data.
13.To calculate the cost of productions.
14.To help the management formulate policies for controlling cost, preparation of quotation for competitive supply etc.