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"Accounting Is The Art of Recording, Classifying, and Summarizing in A Significant Manner and in Terms of

Accounting involves recording, classifying, and summarizing financial transactions and events. It provides quantitative economic information, primarily financial, about entities to help users make informed decisions. Accounting serves as a service activity by communicating this financial information to allow judgment and economic decision making.

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272 views1 page

"Accounting Is The Art of Recording, Classifying, and Summarizing in A Significant Manner and in Terms of

Accounting involves recording, classifying, and summarizing financial transactions and events. It provides quantitative economic information, primarily financial, about entities to help users make informed decisions. Accounting serves as a service activity by communicating this financial information to allow judgment and economic decision making.

Uploaded by

Julia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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“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 financial character, and interpreting the
results thereof.” – American Institute of Certified Public Accountants (AICPA)

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


permit informed judgment and decision by users of the information.” – American Accounting
Association (AAA)

“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 decision.” –
Accounting Standards Council (ASC), succeeded by Financial Reporting Standards Council (FRSC).

 A conceptual framework is a system of ideas and objectives that lead to the creation of a
consistent set standard.
 A conceptual framework can be defined as a system of ideas and objectives that lead to the
creation of a consistent set of rules and standards. Specifically in accounting, the rule and
standards set the nature, function and limits of financial accounting and financial statements.

Why is the Framework Necessary?

With a sound conceptual framework in place the FASB is able to issue consistent and useful
standards. In addition, without an existing set of standards, it isn’t possible to resolve any new
problems that emerge.

The framework also increases financial statement users’ understanding of and confidence in
financial reporting and makes it easier to compare different companies’ financial statements.

Main objectives of financial accounting can be described as follows:

1. Systematic Recording of Financial Transactions


2. Revealing the Financial Position of the Firm
3. Ascertaining the Result of Business Operations
4. Reporting Past Performance and Future Prospect

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