What is accounting? Accounting is the language through which we can understand a business. According to American Institute of Certified Public Accountants -- “ Accounting is an 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 result thereof .” Recording: initial transactions recorded in the books of prime entry . Classifying: transactions in the books of prime entry are classified in similar groups called ledger accounts. Summarizing: summarizing the ledger accounts into trial balance and then to final accounts. Why do we need accounting? At the end of a financial year, businessmen and a companies stakeholders will want to know about the business. So for the purpose of understanding it, we need to accou...
Who are stakeholders? They are various groups of people who need information about the activities of a business. They also effect or get affected by the organisations actions. According to the International Accounting Standard, IAS 1 Presentation of Financial Statements states: “ The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions ” The wide ranges of users mentioned in IAS 1 are these stakeholders. Different types of stakeholders There are mainly three types of stakeholders: 1. Internal stakeholders : - they are groups or individuals from inside the organisation. For example, directors, managers, employees. · Managers are appointed by the organisa...