Accounting is commonly called the “language of business”. Accounting is @ means through which information about a business entity is communicated. It delivers financial information to different users through the financial statements which are the end-product reports in accounting, Example: Mr. Dela Cruz started a printing business. He invested P100,000 personal money to start the company's operations. After a month, Mr. Dela Cruz wants to know how much the business made and if the money invested is still there. Without a way of recording the activities of the business, no basis can be used to answer the questions. Otherwise, it can be pointed out that the business generated a lot of profit for one month without proof and figures. If the company's transactions are being tracked, like out of P100,000 initial investment, P70,000 was used to buy printers and pay the bills. Easily, the balance of cash left will be P30,000. If there is a collection of P50,000 from customers, then the balance of cash would be P80,000. This is a simple illustration of what accounting can do. What if there are thousands of transactions? It follows, that there's a lot more to(Abaouniing ts coneidared an art bececse retiree the 66H Ot creative judgment. One has to be trained in this discipline to be able to perform ‘accounting functions well, 7 Accounting is also considered a science because it is a body of knowledge. However, accounting is not an exact science since the rules and principles are constantly changing (improved). 2. Accounting involves interconnected phases. Recording pertains to writing down or keeping records of business transactions. Classifying involves grouping similar items that have been recorded. Once they are classified, information is summarized into reports which are called “financial statements”. 3. Accounting is concerned with transactions and events having financial character. For example, hiring an additional employee is qualitative information with no financial character. Hence, it is not recorded. However, the payment of salaries, acquisition of an office building, sale of goods, etc. are recorded because they involve financial value. 4, In accounting, business transactions are expressed in terms of money. They are assigned amounts when processed in an accounting system. Using one of the examples above, it is not enough to record that the company paid salaries for Apri. It must include monetary figures ~ say for example, 20,000 salaries expense.or of business transactions in terms of money, the preparation of fing , the analysis and interpretation of these reports and the use of these reports - Recording to Weygandt, Kieso and: Kimmel, accounting is an information syglen that identifies records and communicates the economic events of an organization to interested users. By studying the definition alone, important concepts in accounting will be learned, it will also give an idea of what accountants do.‘summarization, finalization and reporting. . Accounting is an art’ Accounting is an art of recording, classifying, summarizing and finalizing the financial data. The word ‘art’ refers to the way of performing something. It is a behavioral knowledge involving certain creativity and skill that may help us to attain some specific objectives. Accounting is a systematic method consisting of definite techniques and its proper application requires applied skill and expertise. So, by nature accounting is an art. . Accounting is a means and not an end: Accounting finds out the financial results and position of an entity and the same time, it communicates this information to its users. The users then take their own decisions on the basis of such information. So, it can be said that mere keeping of accounts can be the primary objective of any person or entity. On the other hand, the main objective may be identified as taking decisions on the basis of financial information supplied by accounting. Thus, accounting itself is not an objective, it helps to attain a specific objective. So it is said the accounting is ‘a means to an end’ and it is not ‘an end in itsetf.” Accounting deals with financial information and transactions. Accounting records the financial transactions and date after classifying the same and finalizes their result for a definite period for conveying them to their users. So, from start to the end, at every stage, accounting deals with financial information. Only financial information is its subject matter. It does not deal with non-monetary information of non-financial aspect Accounting is an information system: Accounting is recognized and characterized as a storehouse of information. As a service function, it collects processes and communicates financial information of any entity. This discipline of knowiedge has been evolved to meet the need of financial information required by different interested groups.tt ipline, ~ well-equipped with techniques and methods through F | types of transactions measurable in terms ‘of money or money's worth, can be | ‘recorded, classified and summarized in a proper and systematic way. | tthelps to present and explain income, expenditure, profitioss and assets-liabiltios c _ of a particular period and helps the management and investors to be provided with . ‘necessary information and statements. Accounting is a tool to measure the financial position of any entity involving on economic activity. Accounting is an aid to management. It is a system that keeps a ‘record of financial events and analyzes them for presenting reports of the financial result and position of an economic entity. This process gives the management body the information necessary for taking a decision. This information is needed for the interested parties; inside or outside of the organization. ee LS Discuss the different functions of Accounting in business.With the passage 0 of time! human beings qrestally started their social lives aa Started keeping their accounts by marking ticks on walls, making rope-knots and using various symbols. With the gradual-increased demand of human needs and desires, the necessity of accounting was felt sharply. At one stage Luca Pacioli — the father of Accounting brought @ revolutionary change in the field of accounting by writing a book on Mathematics- “Summa de Arithmetica Geometria Proportioniet Proportionlita” — contai a chapter — "De Computes it Scriptures" in which Double Entry System of book keeping was explained. The Double Entry System is a recognized and generally accepted system all cover the world and till date, this system is being used widely with its basic principles unchanged. On the basis of these basic principles, the accountants of modem age have established a scientific accounting system.As a result of economic, industrial, and technological developments, different specialized fields in accounting have emerged. The famous branches or types of accounting include financial accounting, management accounting, government accounting, auditing, tax accounting, cost accounting, and accounting education. 1. Financial Accounting Financial accounting involves recording and classifying business transactions, and preparing and presenting financial statements to be used by internal and external users such as the investors, lenders, suppliers, government agencies, customers. In the preparation of financial statements, strict compliance with generally accepted accounting principles or GAAP is observed. Financial accounting is primarily concerned with processing historical data regarding performance (profit or loss), position (liquidity, solvency), structure (loan, equity) and compliance with legal and regulatory requirements.Rbsoxntng cons vin the administration or use of p /funds to bring about service to the people. Its objective is ‘funds are used to serve the people rather than to eam a profit, 4. Auditing ‘External auditing refers tothe examination of financial statements by g ‘independent party with the purpose of expressing an opinion as to fairnes of presentation and compliance with GAAP. Internal auditing focuses evaluating the adequacy of a company's internal control structure by testin Segregation of duties, policies and procedures, degrees of authorization, other controls implemented by management. . Tax Accounting Tex accounting helps clients follow rules set by tax authorities. includes tax planning and preparation of tax returns. It also involves t determination of income tax and other taxes, tax advisory services such @s ways to minimize taxes legally, evaluation of the Consequences of tax” decisions, and other tax-related matters. . Cost Accounting Sometimes considered as a subset of Management accounting Cost accounting ‘refers to the recording, presentation, and analysis manufacturing costs, Cost accounting Is very useful in manufacturing businesses since manufacturing businesses have the most complicaled costing process. jAccounting research investigates and makes a study of creating, applying, relating or improving accounting theories and business concepts ‘that will suit the changes taking place in a particular business or industry sector. Accounting Information Systems ‘Accounting information systems (AIS) involve the development, installation, implementation, and monitoring of accounting procedures and systems used in the accounting process. It includes the employment of business forms, accounting personnel direction, and software management. Fiduciary Accounting Fiduciary accounting involves handling of accounts managed by a person entrusted with the custody and management of property of or for the benefit of another person. Examples of fiduciary accounting include trust accounting, receivership, and estate accounting, . Forensic Accounting Forensic accounting involves court and litigation cases, fraud investigation, claims and dispute resolution, and other areas that involve legal matters. This is one of the popular trends in accounting today.