Nature and

purpose of
Accounting
What is Accounting ?
• “It is a systematic process of identifying, recording,
measuring, classifying, verifying, summarizing,
interpreting and communicating financial information. It
reveals profit or loss for a given period, and the value and
nature of a firm's assets, liabilities and owners' equity.”  
 Basic features

Accounting is a process

Nature of Accounting is an art

Accounting Accounting is means and not an end

Accounting deals with financial information and transactions

Accounting is an information system

 The primary purpose of accounting is to
provide the information that is needed
for sound economic decision making. 

Purpose of There are various types of accounting

Accounting like financial accounting, management
accounting , cost accounting etc.

The main purpose of financial accounting

is to prepare financial statements that
provide information about organization.
Objectives of accounting
Decision
Recording Planning making

Determine Financial
performance position
Liquidity

Accountab
Users of financial statements

Management
Shareholders and Security Analysts
Lenders
Suppliers
Customers
Government and Regulatory Authorities