Characteristics of Accounting:
Characteristics of Accounting The following attributes or characteristics can be drawn from the definition of Accounting:
(1) Identifying financial transactions and events
- Accounting records only those transactions and events which are of financial nature.
- So, first of all, such transactions and events are identified.
(2) Measuring the transactions
- Accounting measures the transactions and events in terms of money which are considered as a common unit.
(3) Recording of transactions
- Accounting involves recording the financial transactions inappropriate book of accounts such as Journal or Subsidiary Books.
(4) Classifying the transactions
- Transactions recorded in the books of original entry – Journal or Subsidiary books are classified and grouped according to nature and posted in separate accounts known as ‘Ledger Accounts’.
(5) Summarising the transactions
- It involves presenting the classified data in a manner and in the form of statements, which are understandable by the users.
- It includes Trial balance, Trading Account, Profit and Loss Account and Balance Sheet.
(6) Analysing and interpreting financial data
- Results of the business are analyzed and interpreted so that users of financial statements can make a meaningful and sound judgment.
(7) Communicating the financial data or reports to the users
- Communicating the financial data to the users on time is the final step of Accounting so that they can make appropriate decisions.
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