Unit-1 Basic Concepts Of Accounting

In this unit we intend to have an overview of Accounting and discuss its nature, scope and importance.

What do you understand by business entity concept?

What are the objectives of Accounting? Name the different parties interested in accounting information and state why they want it?

What is Accounting?

List the activities involved in Accounting?

Name the parties interested in accounting information?

Write notes on:

a) Advantage of Accounting, b) Branches of Accounting, c) Accounting Process, d) Types of Accounts.

Define Accounting and explain its Scope?

Briefly explain the accounting concepts which guide the accountant at the recording stage?

What do you understand by Dual Aspect Concept? Explain its accounting implications.

What is Accounting?

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The recording of business transactions in a systematic manner is the main function served by accounting. Whichever the form of business organization-a sole proprietorship, a partnership, a company, or a co-operative society-it has to maintain proper accounts. He accounting information is useful both for the management and the outside agencies like tax authorities, banks, creditors etc.
The management needs it for purposes of planning, controlling and decision making. The banks and creditors require it for assessing the credit worthiness of the business and the tax authorities use it for determining the amount of income tax, sales tax, etc.
In fact, accounting is necessary not only for business organizations but also for non-business organizations like schools, colleges, hospitals, clubs etc.