As per the definition accounting and bookkeeping is the simple art of record keeping. Every good record keeping system including classification transaction and event as well as their summarization for ready reference. Essentially the transaction and event are to be measured in the terms of money. Measurement in the terms of money means measuring at the ruling currency of county like rupees in India, Dollar in U.S.A

The transaction and events must have at least in part financial characteristics. The inauguration of new branches of a bank is an event without having financial character, while the business disposed of by the branch is an event having financial character. Accounting and Bookkeeping also interprets the recorded classified and summarized transaction and events.

However the above mention definition does not reflect the present day accounting function. The dimension of accounting and bookkeeping is much broader then that described in the above definition. A widely accepted definition is accounting is given by the American Accounting Association in 1966 which treated accounting as “The process of identifying, measuring and communicating economic information to permit informed judgments and decision by users as accounts.”

An examination of the various elements of the definition shows the role of accounting although many of its implements may become clear as the course advances.

1) There are curtains users of accounts. Earlier it was viewed that accounting is for the owner of the business but change social relationship diluted the earlier thanking. It is now believed that users of accounts includes, employee, ledgers, suppliers and other trade creditors, customers, government and other agencies and the public at large.

2) The users need data for judgment and decisions.

3) Accounting is a process of identifying users information requirement as also generating, recording and communicating such information to users. It also a common measurement unit e.g.: money. Accounting provides the art of presenting information systematically to the users of accounts.

Information is useless and meaningless unless it is relevant and material to a user's decision. The information should be free of any biases. The users should understand mot only the financial results depicted by accounting figures but also should be able to access its reliability and compare it which information about attractive opportunity and the past experience. Accounting data is more useful if it stresses economic substance rather than technical form.