Definition of Accounting

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Posted by geemiz | Posted in Theory of Accounts | Posted on 08-11-2010

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Accounting has many definitions and among the very common definition of accounting is it is a system that provides quantitative information about finances and preparing the financial reports of an entity. But different Agencies have its definition of Accounting.

According to the Accounting Standards Council accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions.

Another definition of Accounting from the Committee on Accounting Terminology of the American Institute of Certified Public Accountants is that accounting is 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 a financial character and interpreting the results thereof.

On the other hand the American Accounting Association defines accounting as the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information.

If you have observed in the different definitions, you can see three important key points which is first accounting is basically about quantitative information second that quantitative information is likely to be financial and lastly that quantitative financial information must be useful in making decision.

The definition of accounting according to the American Accounting Association has stated the basic purpose of accounting and that is:

    financial information must affect any economic decision to be made by any user of that quantitative information.

Meet geemiz


Geezelle Maningo - A Cebu based travel blogger and the other half of GeeMiz Travel blog. She has been traveling around the Philippines and Asia since 2010 with her husband. A casual trekker/hiker since 2017 and has been blogging since 2008. A digital marketer during workdays and a bookworm on lazy days - she co-founded Cebu Book Club.

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