Accounting is not only science but also an art. Accounting in the year 1941, the American Institute of Certified Public Accountant (AICPA) defined it as the art of recording, classifying, communicating, analyzing, interpreting and summarizing the financial transactions. The accounting standards are specified by the Institute of Chartered Accountants of India (ICAI). Some of the basic accounting terms that you will learn include revenues, expenses, assets, liabilities, income statement, balance sheet, and statement of cash flows. The two basic accounting principles, the revenue recognition principle and the matching principle, assure that a company's income statement reports a company's profitability. Accounting statements, whether they are external "financial accounts" or internally-focused "management accounts", a clear objective has to be that the accounts fairly reflect the true "substance" of the business and the results of its operation. The branches of accounting are financial accounting, cost accounting and management accounting. |