Question

What are the main features of accounting?

Answer 1

Main features of accounting are as follows:

1. Identification of Transactions: Only those events are recorded which can be measured in terms of money and are of financial character.
2. Recording: All transactions are recorded systematically in books of original entry (journal, cash book, etc.).
3. Classification: Transactions are classified under proper heads of accounts (e.g., rent, salary, cash, machinery) in the ledger.
4. Summarising: The classified data is summarised in the form of a trial balance, trading account, profit & loss account, and balance sheet.
5. Interpretation & Analysis: Results are analysed and interpreted so that useful conclusions can be drawn for decision-making.
6. Communication of Information: Accounting information is communicated to interested users like owners, managers, creditors, investors, and government.
7. Expressed in Monetary Terms: All transactions are expressed in terms of money (common measuring unit).
8. Deals with Financial Transactions Only: Non-financial events (like efficiency of employees, discipline, etc.) are not recorded in accounting.
9. Based on the double-entry system: Every transaction has two aspects, debit and credit. This ensures accuracy and completeness.
10. Art as well as Science: Accounting is considered an art because it involves skills and judgement and a science because it is based on principles and rules.