INTRODUCTION

Accounting has evolved, as in the case of medicine and law, in response to the social and economic
needs of society. As business and society become more complex, accounting develops new concepts and
techniques to meet the ever-increasing needs for financial information. Without such information, many
complex economic developments and social programs may never have been undertaken.

In a market economy, information helps decision-makers make informed choices regarding the
allocation of scarce resources under their control. When decision-makers are able to make well-
informed decisions, resources are allocated in a way that better meets the needs and goals of those
within market.

Accounting is the relevant in all walks of life, and it is absolutely essential in the world of business.
Accounting is the system that measures the business activities, processes that information into reports
and communicates the results to decision makers.

Accounting quantifies business communication. For this reason, accounting is called the language of
business. The task of learning accounting is very similar to the task of learning a new language.

No business could operate very long without knowing how much it was earning and it was spending.
Accounting provides the business with these information and more. So, accountants can be called the
scorekeeper of the business. Without accounting, a business couldn’t function optimally; it wouldn’t
know where it stands financially, whether its making a profit or not, and it wouldn’t know its financial
situation. Also, a sound understanding of this language will bring about a better management of the
financial aspects of living. Personal financial planning, education expenses, car amortization, business
loans, income taxes and investments are based on the information system that we call accounting.

DEFINITIONS OF ACCOUNTING

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 makng economic decisions.

ACCOUNTING is an information system that measures, processes and communicates financial

information about an economic entity.

ACCOUNTING is the process of identifying, measuring and communicating economic information to

informed judgments and decisions by users of the information.

ACCOUNTING is the art of recording, classifying and summarizing in a significant manner and in terms of
money, transactions and events which are, in the part at least, of a financial character, and interpreting
the results thereof.