ACC 201

Define Accounting (CSLO 1)

Accounting is defined in our textbook as an information and measurement system that identifies,
records, and communicates relevant, reliable, and comparable information about an
organization’s business activities.(Wild, 2016)

Required
In your words, prepare a summary explaining what this definition means, based on the
information you have learned in these three chapters. Use examples and details to describe the
various elements of the definition. Answer questions such as what is the system? How is
information identified, recorded and communicated. What is relevant information? What makes
the information reliable? What makes it comparable?

Complete this assignment on this sheet, attach it to the assignment and turn in through google
classroom when you’re done.

Name: Patricia KInsell Date: 09/22/2017

Summary

Accounting is the processing of a company’s financial information to determine the profit or loss
and position of a company in financial terms. This process follows a set of principles and steps
that ensures the financial records of a company are relayed consistently and accurately each
period and creates a reliable set of records of a business that can be compared and used to
make correct financial decisions. It starts with recording all financial transactions of a business
into a journal using source documents such as receipts and checks. This information is then
posted to the specific account that it affects. At the end of the accounting period the information
is calculated into a trial balance. If there are adjustments that need to be made, an adjusted trial
balance is done and the balanced account totals are transferred to the financial statements,
which is balance sheet and an income statement. The final step is to close out the revenue and
expense accounts in order to begin the new accounting period with zero balances. When
following the standards and principles of accounting, the financial information produced is
reliable and accurate because the accounting principle only records transactions that can be
verified with evidence.