Lesson Summary and Quiz
Familiarization and understanding are necessary before mastery is achieved. The course serves as an introduction to accounting starting with its definition from different perspectives, focusing on accounting as a service activity, which is the basis for quality and standards. The characteristics of accounting come from its nature and activities. Knowing its history from ancient civilization to its current state, and significant developments during the intervening periods encourages appreciation and deeper understanding of underlying principles and practices.
Lesson summary
This is a summary of the salient points in each lesson. Be sure to complete the main lessons before proceeding to this unit.
Accounting goes by many definitions. One definition is based on what accounting does which includes recording, summarizing, and the other steps in the accounting cycle. Accounting is also defined as a body of knowledge since it is based on concepts, principles, and theories that have been proven to be relevant and useful over time.
An important perspective in defining accounting as a service activity which relates to the objective of accounting which is to provide information. The service concept draws attention to customers who are users of information who expect quality of service based on the quality and usefulness of information. This expectation establishes a need for standards and consistency in the application of principles and procedures.
Accounting has both similarities with and distinctions from other professions. These are evident in its nature, activities, and functions. Accounting by nature is quantitative, financial in character, and is an analytic discipline. The quantitative nature of accounting is founded in its use of Arabic numerals which facilitate computation and calculation. Its financial character comes from the use of money as a medium of exchange. Money is a common denominator of value that is accepted in almost all transactions by all parties to the transactions. Money also is a convenient expression of value.
The activities of accounting are distinctive. It measures transactions and events to put value to the items included in the accounting records. Its processes are based on an organized information system, which puts order and efficiency to its processes. The output of accounting is communicated to users of financial information through financial statements. The communication activity is just as important as all other activities.
The specific functions of accounting vary among businesses. These functions pertain to specific tasks performed during the accounting cycle. All the basic tasks during the cycle are performed regardless of the nature of the business in order to prepare and publish the financial statements. However, additional functions, like payroll preparation, tax preparation and filing, and many others may or may not be performed, or vary in terms of frequency and amounts among different companies.
Students of accounting study its history for most of the same reasons historians do. Tracing the history of accounting through different and significant periods and eras leads to deeper understanding of its development and the role it played in society. Accounting is a product of its environment facilitated by discoveries that made it easier, more efficient and convenient. These facilitators enabled the accountant to meet the demands of users of information who needed to make decisions also in response to environmental factors.
With more discoveries and other developments, like the use of steel that ushered in the industrial revolution, new business practices, and greater demands for the services of accountants, the profession responded by establishing standards of service, the development of principles and practices that the general public accepted. Protection of rights and obligations, safeguarding of assets, and the interests of investors involve trust and reliability of information. These raised the stature of accounting to an esteemed level, respected and valued by society, who also demanded high standards of service. The history of accounting is a constant reminder to the accountant of this responsibility.
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End-of-lesson quiz
This is a thirty-minute, thirty-item quiz. You can take and retake the quiz any time. Have a passing score, at least once, of twenty-four correct answers (80%). You may skip questions for later review but items unanswered upon submission are counted as incorrect. Take the quiz when you are certain of your familiarity with and understanding of the course contents. You may view statistics for the course on your profile page.
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