Key Theories Of Accounting

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theoretical explanations of key concepts Management is constantly confronted with the problem of alternative decision making especially knowing that resources are relatively scarce and limited. It is therefore pertinent that good accounting information be made available for proper and accurate decision making, maximization of profitability and optimal utilization of scarce resource. Accounting is defined by Webster’s ninth new collegiate dictionary, as “the system of recording and summarizing business and financial transactions and analyzing, verifying and reporting the results. Accounting can be defined as an art of recording, summarizing, reporting, and analyzing financial transactions (Stan Snyder, 1997). Warren, et al., (2005) defined…show more content…
The primary objective of accounting is to provide information that is useful for decision making purposes. It means that accounting is an information providing activity. Warren, et al. (2005) also stated that the objective of accounting is simply to produce information used by managers to run company’s operation. Accounting also gives information to the interesting parties about economic performance and company’s condition. According to Considine et al. (2010), accountings role is to gather data about a business’s activities, provide a means for the data’s storage and processing, and then convert those data into useful information. An accounting system consists of the personnel, procedures, technology, and records used by an organization (1) to develop accounting information and (2) to communicate this information to decision makers (Williams, et al., 2008). Accounting information is raw data concerning transactions that have been transformed into financial numbers that can be used by economic decision makers (Jones et al., 1996). Nwaigburu and mark (2014) also stated that accounting information is knowledge or news about a reckoning of financial matters. Accounting information is central to many different activities within and beyond an organization (Considine et al., 2010). Accounting information is essential to business operations. According to Williams et al. (2008), the types of accounting information that a company develops vary with such factors as the size of the organization, whether it is publicly owned, and the information needs of management. The types of accounting information required depend on the types of business decision made by management. It means that the role of accounting information is to assist managers in making business decisions. Handayani (2011), classified accounting
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