What is Accounting in Class 11

Accounting refers to accounting, classifying, summarising and presenting transactions (or transactions) of financial nature in such a way that they can be analysis and interpreted. Summary in accounting means to prepare Trial Balance and the basis of
and interpretation are Final Accounts, under which Business Account, Profit and Loss Account and Statement or Balance Sheet are prepared.
Accounting is the art of recording , classifying and summarising in a significant manner and in terms of money transactions and events which are , in part or at least of a financial character and interpreting the results. Accounting is the most important in Business. Accounting is the art or a Science.

1. Accounting
In the modern era, along with the increase in the size of the business, the complexities of the
business have also increased. Business is related to many customers and employees.
That's why hundreds, thousands or even millions of transactions happen in the business
world. It is difficult to remember all the transactions orally. We want to know the profit of the
business and also want to know how much are its assets, how much are its liabilities or
liabilities, how much is its capital, etc - etc. . Accounting is required for the information of all
these things.
Meaning of Accounting
Accounting refers to accounting, classifying, summarising and presenting transactions (or
transactions) of financial nature in such a way that they can be analysis and interpreted.
Summary in accounting means to prepare Trial Balance and the basis of
and interpretation are Final Accounts, under which Business Account, Profit and Loss
Account and Statement or Balance Sheet are prepared.
Defination of Accounting
" Accounting is the art of recording , classifying and summarising in a significant manner and
in terms of money transactions and events which are , in part or at least of a financial
character and interpreting the results ".
Various Aspects related to
Definition of Accounting
(1) Economic Events - Business organisations are related to economic / financial events
which can be measured in terms of money. Economic events are the purchase of goods,
purchase of machinery, sale of goods and services, etc.
Economic Events
Economic Events
(2) Identification of Business Transactions - It means to determine which transactions are to
be accounted i.e. to identify those events which are to be recorded.
Identification of Business Transactions
Identification of Business Transactions

2. (3) Measurement of Transactions - Only those transactions are recorded in the books of
accounts which are possible to be valued in terms of money. For example, placing orders
for the supply of goods, hiring of employees are important events, but they are not
accounted for, as they are not measurable in terms of money.
Measurement of Transactions
Measurement of Transactions
(4) Recording - The accounting of transactions of financial nature in the books of account is
done according to the date wise rules.
Recording
Recording
(5) Communication - Various types of people and organisations use accounting information.
Therefore, the transactions are recorded in such a way and the summary is prepared in such
a way that the accounting information can be useful to the internal and external users.
Communication
Communication
(6) Organization - means any business enterprise whose purpose is to earn profit.
Organication
Evolution and Development
of Accounting
The history of bookkeeping and accounting is related to the history of money. Evidence is
available from the fact that financial accounting was in one form or the other during the
Babylonian and Vedic civilizations, but the double accounting system of accounting first
started in Italy. It is noteworthy that the practice of accounting in India is believed to be from
the time of Kautilya, 2300 century ago, who was the great minister in the kingdom of
Chandragupta Maurya and who wrote a book called 'Arthashastra' in which how to keep
accounting records was described. In China and Egypt also, accounting was kept for
keeping the revenue related records of the government treasury.
Fra Lucas Pacioli is called the father of modern bookkeeping. Pacioli was a famous
mathematician. 194 AD In Venice, Italy, his book

3. Summa De Arithmetica, Geometrica, Proportiont at Preportionalita was published. There
was a chapter in it called 'De Computiset Scripturisc'. This book is considered to be the first
book of double-numbering bookkeeping. It was a mathematics book and in one of its
sections, the method of bookkeeping was described at that time. In this book, the most
popular words of today's accounting, debit (Dr.) and credit (Cr.) were used. He had
described in detail the Memorandum, General, Ledger and specific accounting procedures.
Explaining the double marking system, it is written that all the entries are marked twice i.e. if
you make a creditor then you have to make a debtor. The English translation of this book
was done by Hugh Old Cassel in 1543. Before the publication of this book, the double
accounting system was prevalent in a scattered form. The bookkeeping system which was
prevalent before the Italian system was called Agency Book-keeping. When the Italian
system entered England, it was used instead of agency book-keeping. Later, especially in
the sixteenth century, many books on bookkeeping were published.
Over the years, many changes took place in this system. The Italian system of
book-keeping underwent many changes and improvements in the 17th century. There have
also been changes in the words used in General and Ledger) For example, instead of De
Dare or Shall or Give, get Dr. That is, Debtor was used. In 1795, Edward Jones wrote a
book on the English System of Book-keeping. As a result of this book-keeping got an
opportunity to develop as an accountancy. Later on Cost Accountancy, Management
Accounting, Human Resource Accounting etc. were born. Then external auditing started.
(पुस्तपालन) ➡ ( लेखाकर्म) ➡ (अंकेक्षण)
bookkeeping ➡ accounting ➡ workaudit
Feature of Accounting
The following characteristics are evident:
(1) Accounting is the art and science of writing and classifying business transactions.
(2) These transactions are in whole or in part financial in nature.
(3) Transactions are expressed in currency.
(4) It is the art of summarising, analysing and interpreting.

4. (5) The information of analysis and interpretation should be communicated to those persons
who have to draw conclusions or results or take decisions on the basis of these.
Accounting Cycle
Accounting cycle is a complete sequence/sequence which starts with the recording of
transactions and ends after the preparation of Final Accounts i.e. Financial Statements
which is repeated every year.
Accounting Cycle
Accounting Cycle
Objectives of Accounting
The following are the objectives of accounting:
(1). To Keep Systematic and Complete words of Business Transactions - The first objective
of accounting is t To Keep Systematic and Complete words of Business Transactions To
Keep Systematic and Complete words of Business Transactions o complete and
systematically account for all business transactions. To do . By doing accounting in a
systematic manner, there is no possibility of mistake and the result is obtained pure.
(2). To determine Net Profit - Loss - To determine the profit - loss of a certain period. To find
profit and loss, the trader prepares Profit and Loss Account or Income Statement.
(3) To Assure Financial Position of the Business - One of the objectives of accounting is to
obtain information about the financial position of the organization. For this purpose, a
position statement is prepared in which Capital and Liabilities are shown on the left side and
Assets are shown on the right side. Status statement is also called balance sheet. If the
liabilities (capital and liabilities) are less than the assets, then the economic condition of the

5. business is considered to be strong and if the liabilities are more then it is an indicator of
poor economic condition.
(4). To Provide Information for Economic Decisions - One of the functions of accounting is to
provide information of financial nature so that managers can be facilitated in decision
making, as well as to take correct decisions.
(5). To Provide Information to Interested Parties - Many parties have interests in business,
such as - proprietor, employee class, manager, creditor, investor, etc. . It is also one of the
objectives of accounting to provide information related to them to the various parties
interested in the business.
(6). To Meet Legal Requirements - One of the objectives of accounting is also to meet
various statutory requirements.
Nature of Accounting
1. Accounting is humanised.
2. It has developed over time.
3. Its behavior is done under the social system.
4. This is a systematic effort.
5. It is also the method of manufacture.
6. This is the language of business.

6. 7. It has its own syntax as a language.
8. It provides financial information to the users of accounting information.
9.This is a service work.
Accounting A Science or an
Art
Accounting is a science as well as an art. The following facts are important with respect to
the nature of accounting.
(1) Accounting: is an art (Accounting An Art) - Accounting has been considered as 'art'.
According to the AICPA, “Accounting
is the art of effectively writing down,
classifying and summarising the
accounts and events of business, which
are wholly or partly related to finance,
and to interpret their results.”
(2) Accounting: is a science (Accounting: A Science) - Accounting is a science, because in
this systematic and systematic study of the subject matter is done. Accounting has its own
principles and rules. Although the principles of accounting are not as firm and universal as
the laws of natural science, they are generally accepted.
Function of Accounting
There are six functions of accounting which can be expressed by the following chart:

7. Accounting
⬇
Accounting work
⬇
Explanatory work
⬇
Communicative function
⬇
Meet statutory requirements
⬇
Protect Business Assets
⬇
Assets in decision making
Types or Branches of
Accounting
Different types of accounting methods have evolved to fulfill different purposes. These are
called types of accounting or branches of accounting. The main branches of accounting are
as follows:
(1) Financial Accounting,
(2) Cost Accounting (Cost Accounting),
(3) Management Accounting
(1) Financial Accounting - Financial Accounting is the accounting under which
transactions of financial nature are accounted. They are also called general accounting and

8. On the basis of these accounts, profit-loss or income statement and balance sheet are
prepared.
Thus the following are the main functions of financial accounting:
(i) recording the transactions related to business or institution in the appropriate books;
(ii) to prepare necessary accounts, profit and loss account and balance sheet;
(iii) to inform the business owner or related parties of the business results for a certain
period.
(2) Cost Accounting - Cost accounting is a subsidiary of financial accounting method. Cost
accounting is the method of accounting for the cost of a good or service in a systematic and
scientific manner. Through this, the total cost of the goods or services and the cost per unit
can be correctly estimated. It also controls the cost.
(3) Management Accounting - It is the modern link of accounting. When an accounting
method provides the necessary information for the needs of the management, then it is
called managerial accounting. According to Robert Anthony, “Management accounting is
concerned with accounting information which is useful for management. Management
needs are related to planning, organization and control.
Other Branches of
Accounting
(4) Tax Accounting
(5) Government of Accounting
(6) Social Accounting
(7) Human Resource Accounting ie..., HRA
Advantages of
Accounting
In today's era, the importance of accounting or accounting (accounting method) has
increased a lot. The knowledge of this scripture not only benefits the businessmen, but also
benefits the government and other parties.
Benefits of Accounting
1. Knowledge of Business related information
2. Fair business valuation
3. Evidence in court
4. Loan Assistant
5. Assisting in Comparative studies

9. 6. Assist in Management and decision Makin
Limitation of ( Financial )
Accounting
Some of the major limitations of accounting are as follows.
(1) Lack of a complete collection of principles - One of the biggest drawbacks of accounting
principles is that there is no complete collection or list of its principles.
(2) Postmortem examination - Financial accounting presents postmortem analysis (ie for
past problems). It ignores future plans.
(3) Lack of consensus on principles - Whatever the principles of accounting, not all
accountants agree on many of the principles. The principles of accounting are 'generally
accepted principles'.
(4) There are many differences in the adherence to the principles of accounting. As a result,
results vary and comparisons are difficult.
(5) Accounting of monetary facts only - In accounting, only those events and facts are
recorded which can be expressed in terms of money. Therefore, any event, no matter how
important it is to the business, is not possible in the books of account until its monetary
measurement is not done.
(6) Presenting a picture of a limited period - (Financial) Accounting presents a picture of a
limited period only, such as the profit and loss account for a certain period or the balance
sheet of a certain date.
(7) Lack of explanatory statement- There is also lack of analytical details in accounting, due
to which it is difficult to determine the increased profitability of the enterprise.

10. (8) Not being able to tell the actual value - In accounting, the recording of assets is done at
its cost value. Hence, it does not present the net value of the business i.e. does not tell the
actual value.
Accounting as a sources of.
an information System
Accounting as an information is a definite process of interconnected activities that begins
with the identification of transactions and ends with the formulation of financial statements.
Information is generated at each stage of the accounting process. Dissemination of
information is an essential function of accounting.
Accounting as an information system helps individuals and organisations interested in
making business and economic decisions. Thus, as shown in the following figure,
accounting acts as a 'link' between business activities and transactions and decision makers.
Role of Accounting
With the change in economic development and increasing demand for social needs, the role
of accounting has been changing. Today accounting is not limited to just recording of
transactions but it is recognised as a function of information system and decision making.
Certainly the term accounting is becoming increasingly widespread. It analysis and
describes the vast data of the enterprise through measurement, classification and
summarisation. Accounting presents data in the form of statements and reports that show
the financial position and operating results of that organization. That is why it is called the
language of business. The role of accounting is also confirmed by the following facts:
This service also performs the function of providing quantitative financial information which
helps the users in many ways.
Accounting as an information system collects different types of information of an
organization.
It communicates the collected information to various interested parties in the business,
thereby facilitating them in decision making. It may be noted that accounting information is
quantitative and financial.
They do not provide qualitative and non-financial information.
Role of an Accountant in
Society

11. In modern times an accountant plays an important role in the society. Business uses the
resources that belong to the society. Therefore, every enterprise should fulfill its
responsibility towards the society. The accountant plays an important role in the discharge
of the responsibility of the business enterprise towards the society. Accountant with his
specialized education, knowledge, extensive training and experience not only prepares the
accounts and statements but also provides other related services which are required by the
management. It helps the managers to perform their duties with full efficiency, which makes
efficient and better use of resources possible. The role of an accountant in society includes
the following:
Maintaining proper books of account which can accurately and accurately reflect the results
of the business.
To provide information and reports to the management so that they can perform their duties
efficiently.
To act as auditor for verification of accounts as per requirements of law.
To act as an internal auditor to strengthen the hands of the management.
To work as a Tax Consultant to look after the tax related matters of the business To work as
a Management Consultant to provide services in relation to the financial planning of the
business.
Thus, these days an accountant provides many services to the ever-developing society.
Values affected by
Accountant
(1) Responsibility towards the society - Accountants play an important role in the society.
Therefore, it is their responsibility towards the society to maintain proper books of account
which can accurately reflect the results of the business.
(2) Ethical values ​​- The accountant also has to take care of ethical values, so that he can
ensure that the accounting information is displayed correctly and that the resources of the
society are used efficiently and optimally.

12. Concept
Accounting is the discipline which is mainly concerned with the recording, classification and
analysis of transactions and events of financial nature. Its function is to provide quantitative
information regarding economic activities which are very useful in decision making work.
(Accounting is the language of business. The basic function of any language is to provide
assistance in the form of communication. Accounting also performs this function. It transmits
the results of business activities to different parties. Those who have a direct or indirect
interest in business. Although accounting is generally related to business, non-business
organisations, such as schools, colleges, hospitals, clubs, charitable institutions, government
and other individuals also use it extensively. In other words, wherever there are transactions
related to money or money, there is a need for accounting. Today the use of accounting is
universal. It has developed along with the development of trade, industry and commerce.