Before attempting to define accounting, it may be made clear that there is no unanimity among accountants as to its precise definition. Anyhow let us examine three popular definitions on the subject:
Accounting has been defined by the american accounting association committee as:
“the process of identifying,
measuring and communicating economic information to permit informed judgments
and decisions by users of the
This may be considered as a good
definition because of its focus on accounting as an aid to
The american institute of
certified and public accountants committee on terminology defined accounting
“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 a financial
character and interpreting the results thereof ”. of all definitions available, this is the most acceptable one because it
encompasses all the functions which the modern accounting system performs.
“accounting is a service society. Its function is to provide
quantitative information, primarily financial in nature,
about economic entities that is useful in making economic decision, in making
reasoned choices among alternative courses of action”.
This is a very relevant definition in a present context of business
units facing the situation of selecting the best among the various alternatives
available. The special feature of this definition is that it has designated
accounting as a service activity.