GCSE/IGCSE accounting revision notes section 1

What is accounting

Accounting is the art of recording, classifying and presenting data in a manner that it may be used by other people.

Accounting comes after book keeping

 

What is book-keeping

Book keeping only refers to the keeping of records in the appropriate books.

Book keeping comes before accounting

 

Purpose of measuring profit and loss

To determine whether the business is operating in the right manner

To decide policies and measures

 

Role of accounting in decision making

Accounting provides the business manager all the summarized data to make informed decision.

For example

Accounting showed that there was an increase in costs, so the business would decide to lower costs and adopt more cost effective measures