What is the money measurement concept? Since both the aspects of transactions are considered there is a complete recording of each and every transaction. Accounting is used to maintain a systematic record of all the financial transactions in a book of accounts. Qualitative characteristics of accounting information that must be present for information to be useful in making decisions: 1. Copyright © 2020 saralstudy.com. 10,000+ Fundamental concepts. Trail Balance and Rectification of Errors. To understand accounting efficiently, it is important to understand the aspects of accounting. Ledger. It helps them in making good financial decisions. Overview. notes provided is very helpful to the students, Your email address will not be published. Qualitative Characteristics of Accounting Information. (i) All transactions cash memos, bills, etc. It requires specialized skill to analyze, so it is performed by senior staff. The following steps are involved in accounting process: (1) Identification : It is the process of identifying and analysing business transactions. 5,000 (Debit) (b) Rs. This system of accounting recognises and records both the aspects of the transaction. Every transaction has two aspects, ‘a Debit’ and ‘a credit’ of an equal amount. This job is in routine and repetitive in nature. Extra Questions of Class 11 Accountancy Introduction to Accounting. Accounting process is the process of collecting, recording, classifying, summarising and communicating financial information to the users for judgement and decision-making. 8,000+ Fun stories. The main aim is to maintain systematic records of financial transactions. (ii) Cash and bank transactions Bookkeeping involves identifying, measuring, recording & classifying financial transactions in the ledger accounts. Differentiate between source documents and vouchers. (iii) Only cash transactions (b) Two sided errors only. The ability to do intra-firm comparison (within the same company), inter-firm comparison (with other companies), and market sector comparison(comparison within the same market sector) makes accounting information easy to work with. 1,000. Accounting provides factual information about financial performance during a given period of time. a. By analysing financial data and providing interpretations in the form of reports, accounting assists management in handling business operations effectively. Accounting can be defined as a process of reporting, recording, interpreting and summarising economic data. For this, all the transactions are recorded in chronological order in Journal and then posted to principle book i.e. 2. Hence, the available information should be free from any errors and unbiased. Comparability− It is the most important quality of accounting information. Relevance: Information that is appropriate should be made easy to access and timely available. 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’. The American Institute of Certified Public Accountants (AICPA) had defined accounting as the “art of recording, classifying, and summarising in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof”. Defined as a process of identifying, recording & classifying financial transactions in the ledger accounts equal.! Interprets results to the management for taking decisions recorded for all the transactions... ) recording: for recording, interpreting and communicating the financial position of business! Information for decision making and in comparison to other businesses sharing the financial data to the users of nature! 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