Accounting in the Economy
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ACCOUNTING IN THE ECONOMY
OBJECTIVE
The objective of this work is to discuss the basic theories of accounting focusing on capital and money as well as the role of accounting in the economy.
INTRODUCTION
Accounting’s role is central to decision making in the economy. The work of Hoggett, Edwards and Medlin (nd) states that accounting “is a service activity” which uses “words and symbols to communicate financial information useful for decision making.” It is related that the terminology and symbols used in accounting “have developed from the earliest known accounting records.” (Hoggett, Edwards and Medlin, nd) The accounting profession has “evolved in response to society’s need for economic information to help people make economic decisions.” (Hoggett, Edwards and Medlin, nd)
I. DEFINITION
Accounting is stated to have been referred to as the “language of business”. (Hoggett, Edwards and Medlin, nd) Accounting has been further defined “as the process of identifying, measuring, recording and communicating economic information to permit informed judgments and economic decisions.” (Hoggett, Edwards and Medlin, nd) Accounting’s primary purpose of accounting is stated to be assisting individuals in making economic decisions. Accounting information “provides the basis for making decisions about resource allocation. To be useful, data must be identified, measured, recorded, classified, summarized and communicated to potential users.” (Hoggett, Edwards and Medlin, nd)
II. POTENTIAL USERS OF ACCOUNTING INFORMATION
Hoggett, Edwards and Medlin state that the primary objective of accounting is the provision of information in the form of reports “which can be used by internal and external decision makers.” (Hoggett, Edwards and Medlin, nd) Reports which are prepared for the benefit of decision makers external to the entity are referred to as ‘financial accounting’. These users include “investors, or creditors of the entity.” (Hoggett, Edwards and Medlin,...
OBJECTIVE
The objective of this work is to discuss the basic theories of accounting focusing on capital and money as well as the role of accounting in the economy.
INTRODUCTION
Accounting’s role is central to decision making in the economy. The work of Hoggett, Edwards and Medlin (nd) states that accounting “is a service activity” which uses “words and symbols to communicate financial information useful for decision making.” It is related that the terminology and symbols used in accounting “have developed from the earliest known accounting records.” (Hoggett, Edwards and Medlin, nd) The accounting profession has “evolved in response to society’s need for economic information to help people make economic decisions.” (Hoggett, Edwards and Medlin, nd)
I. DEFINITION
Accounting is stated to have been referred to as the “language of business”. (Hoggett, Edwards and Medlin, nd) Accounting has been further defined “as the process of identifying, measuring, recording and communicating economic information to permit informed judgments and economic decisions.” (Hoggett, Edwards and Medlin, nd) Accounting’s primary purpose of accounting is stated to be assisting individuals in making economic decisions. Accounting information “provides the basis for making decisions about resource allocation. To be useful, data must be identified, measured, recorded, classified, summarized and communicated to potential users.” (Hoggett, Edwards and Medlin, nd)
II. POTENTIAL USERS OF ACCOUNTING INFORMATION
Hoggett, Edwards and Medlin state that the primary objective of accounting is the provision of information in the form of reports “which can be used by internal and external decision makers.” (Hoggett, Edwards and Medlin, nd) Reports which are prepared for the benefit of decision makers external to the entity are referred to as ‘financial accounting’. These users include “investors, or creditors of the entity.” (Hoggett, Edwards and Medlin,...