Introduction Of Accounting And Its Type

Introduction:- 

• In all activities and in all organizations that require money and other economic resources, accounting is requires to account for these resources.
• In other words, wherever money is involved, accounting is required to account for it.
• The purpose of accounting is to provide a means of recording, reporting, summarizing, and interpreting economics data. In order to do this, an accounting system must be designed.
• Accounting is the language of business.
• It has its orgin from 'stewardship accounting' from 15th century when wealthy men used to employ stewards to manage their accounts.

Accounting Is Science Or An Arts?

• Accounting is both science and an art.
• Science may be defined as a systematized body of knowledge based on certain priciples, which have universal application.
• Art, on the other hand is the application of knowledge comprising of some accepted theories, principles, rules, concepts and conventions. It helps us to achieve over goals and tells us the manner in which we may attain our objectives in the best possible way. The more we practice an art the more expert we become in it. 
• Accounting is a science because recording, classifying and summarizing of business transaction is done on the basis of certain principle such as principle of Double Entry System, which are universally applicable.
• Accounting is based on certain concepts and conventions and is subject to some limitations. It is influenced by bias and personal judgment of the accountant. The more a person does accounting, the more proficient he becomes in it. To this extent, accounting is still an art.

Definition Of Accounting:-

Financial accounting is the process of

1. Identifying,
2. Measuring, 
3. Recording,
4. Classifying,
5. Summarizing,
6. Analyzing, 
7. Interpreting and
8. Communicating

the financial transactions & results thereof to the stakeholders(interested parties)

Branches Of Accounting:-

Financial Accountig:

• This is the original form of accounting and has been in use since the beginning.
• It include Bookkeeping and Accountancy and is mainly related to recording and preparation of financial statements.

Management Accounting:

• It is that area of accounting, which assists the management in efficient and successful operation of the organization concerned.
• It is concerned with analysis, interpretation of financial accounting to derive meaning full conclusions for future growth.
• There are number of tools/techniques for this purpose like ratio analysis, fund flow & cash flow statement analysis, comparative statements etc.

Cost Accounting:

• It deals with the estimation, recording, allocation and control of costs.
• It is followed by manufacturing concerns.

The object is to :-

1. Compute the cost of product being manufactured.
2. Curb the cost through application of cost control techniques.