Accounting: Meaning And Definition Of Accounting

Meaning and Definition of Accounting

According to the American Institute of Certified Public Accountants [AICPA]

“ accounting is an 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 a financial character, and interpreting the result thereof’.

Current trends of Finance Industry

Indian financial reforms started with the Narasimham Committee recommendations, the author traces. “The Committee proposed a wide range of proposals which laid the strong foundation for the strength and the resilience of the financial system today. Reforms were focused on the banking sector, financial institutions (FIs), capital market, and money market.”

As a result

They are the cost incurred in the process of earning revenue. Expenses are measured in terms of cost of services used during an accounting period for example, rent, wages, salaries etc. or in terms of cost of asset consumed during an accounting period like, depreciation. Loss Loss is the excess of expenses over revenue in an accounting year and represents increase in owners’ equity.

Profit

Income is the ultimate increase in the net worth of an organization. It is a change in the wealth of the firm over a period of time. Income includes profit also.

Assets

Assets are properties and things of value owned by the business or firm which can be expressed in monetary terms. Fixed assets are assets held on a long term basis by the company, for example, building, machines; plant etc. current assets are assets held on short term, such as, cash in hand, bank, debtors etc.

7. Liabilities Liabilities are the obligations which an enterprise owes. Liabilities represent amounts payable by the business in the future. They represent the claims against the asset of business. Liabilities can be both long term or short