Definition of Accounting

Definition of Accounting - Definition of Accounting...

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Definition of Accounting
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Accounting is a process that  1.   identifies identifies , 2. 2.     measures measures , and  3 communicates communicates  financial  information about an  4.   entity entity  to  5.   interested users interested users .
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Transactions  = events that change  a  company’s financial position.  Examples:  Purchase land Sign a contract Effect financial position:      Assets = Liabilities + Equity
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1. A dollar amount must be  attached to the transaction in  order for it to be recorded. 2. Objective amount = historical cost (original  cost).
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Relevant financial information is provided     primarily through financial statements  and  related disclosure notes .  Balance Sheet  Income Statement  Statement of Cash Flows  Statement of Shareholders’ Equity
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Three types of business entities: 1.
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