The confusion between accounting principles, standards, formats, methods among businesses is going on from the 19th century. This is because large business might follow a different method against a small business but even though the standards, the formats are the same, as the principles might differ. So is the confusion between a service organization and a not non service organization, between a profit oriented organization and service oriented organization. That's why the best methods are selected of accounting for different types of businesses for effective and accurate information as output.
What is accounting????
Despite the fact that many practitioners describe accounting as an art and not a science, there seems to be a little consensus on an accurate definition of the term. Many dictionaries do not provide a direct definition but define the term 'accountant' as one liable to render account, or a professional keeper and inspector of accounts.
Using the lattes as a starting point, it is probably easier to describe accounting as a process rather than proving a precise definition. Hence "accounting can be described as the process of recording, classifying and summarizing the financial transactions of a business organization and reporting, interpreting and communicating this information to interested parties such as the owners(s) of the business, creditors, and investors." The accounting process also involves the forecasting of financial data, for example, the preparation of sales budgets [Lindsay Yates, 1989, p.1].
For any process or experiment certain ways and rules are been prescribed through which the process is put into action and output is generated. Same ways in the accounting process certain principles, accounting standards, formats; laws are established to make accounting statements understandable and useful by everyone. For this, accounting standards were first issued in Australia in the late 1960s and early...