Nature & Scope Nature & Scope of ofAccounts in Accounts in everyday lifeeveryday life

IntroductionIntroduction

Everyday we, generally, exchange Everyday we, generally, exchange money and goods in our private money and goods in our private and family life and also in and family life and also in institutions. These acts of giving institutions. These acts of giving and taking result in monetary and taking result in monetary changes to respective parties in changes to respective parties in every case. It is necessary to keep every case. It is necessary to keep record of monetary transactions.record of monetary transactions.

Meaning of accountingMeaning of accounting

•DEFINITION:-DEFINITION:- American Accounting American Accounting

AssociationAssociation defines,” defines,” Accounting refers to the process Accounting refers to the process of identifying, measuring and of identifying, measuring and communicating economic communicating economic information to permit informed information to permit informed judgments and decisions by judgments and decisions by users of the information.”users of the information.”

History of AccountingHistory of Accounting

• At the stone age period the people At the stone age period the people used to keep record of their preyed used to keep record of their preyed beasts and collected fruits and roots beasts and collected fruits and roots by drawing lines on the stones inside by drawing lines on the stones inside the cave, snatching on the bark of the cave, snatching on the bark of trees or making knots with the help trees or making knots with the help of creepersof creepers..

• When they began living in the When they began living in the society, they started to keep record of society, they started to keep record of their produced crop by marking off their produced crop by marking off on the wall of their houses and on the wall of their houses and making knots with the help of the making knots with the help of the ropesropes..

• After the introduction of money as a After the introduction of money as a medium of exchange, the monetary medium of exchange, the monetary activities of man further expanded. activities of man further expanded. Professional merchant class emerged Professional merchant class emerged and trading started. With this writing and trading started. With this writing accounts of all total purchase, sales, accounts of all total purchase, sales, assets and liabilities started. assets and liabilities started.

• Modern accounting (15Modern accounting (15thth century) century)

Scope of AccountingScope of Accounting

• Scope is very wideScope is very wide

• Needed not only by business class Needed not only by business class but also by non-business class.but also by non-business class.

• Financial activities of professionals Financial activities of professionals including doctors, engineers and including doctors, engineers and lawyers.lawyers.

OBJECTS OF OBJECTS OF ACCOUNTINGACCOUNTING• Proper recording of transactionsProper recording of transactions

• Determination of resultsDetermination of results

• Ascertain of financial positionAscertain of financial position

• Supplying of financial informationSupplying of financial information

• Defalcation preventedDefalcation prevented

Accounting Accounting principlesprinciples• Entity conceptEntity concept

• Accrual conceptAccrual concept

• Going concern conceptGoing concern concept

• Revenue conceptRevenue concept

• Realization conceptRealization concept

Necessity and importance of Necessity and importance of accountingaccounting

• Institutional necessityInstitutional necessity

• In day-to-day lifeIn day-to-day life