What do You mean by Accounting? Discuss the basic Concepts of Accounting.

Definition Of Accounting

Accounting is the systematic recording, reporting, and analysing the financial transactions of any person, business, or organisation. It helps to find the organisations profitable statements.

In other words, Accounting is one of the most important aspects of business and is required to know the business performance. It helps us to ascertain the profit and financial position of a business or an organisation.

According to the American Institute of certified public accountants " Accounting is the art of recording , classifying , summarising in a significant manner and in terms of money 💰 transactions and events which are in parts at least of financial character and interpreting the results thereof."

 Concepts of Accounting:

There are many concepts of accounting are as follows below:

1. Business entity concept
2. Going concern concept
3. Measurements of money concept
4. Dual aspect concept
5. Cost concept
6. Matching concept
7. Accounting year concept

1. Business entity concept: In this concept, a business and it's owner should be treated separately as far as their financial transactions are concerned.
2. Going concern concept: In this concept, a business is expected to continue for a long time and carry out its obligations.
3. Measurements of money concept: In this concept, only business transactions that can be expressed in terms of money are recorded in accounting may be kept separately.
4. Dual aspect concept: In this concept, a corresponding debit transaction is made for each and every credit. So, the recording of a transaction is complete only the basis of dual aspect concept.
5. Cost concept: In this concept, the fixed assets of any organisation or business are recorded on the basis of their original cost in the 1st year of accounting. Eventually, these assets are recorded minus depreciation. That means; no rise or fall the value of assets in market price is taken into account. This concept is applies only to fixed assets.
6. Matching concept: Matching concept instruct that for each and every entry of revenue recorded for correctly calculating profit and loss in a given period.
7. Accounting year concept: In this concept, every business or organisation chooses a specific time period to complete the accounting process. Such as Financial year or Calendar year.

              So, I think I have covered the topic with best of my experiences but as it is a vast topic may other experts have different views! 

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