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Real Nature of Accounting

Real Nature Accounting is essentially described as:

An Intellectual discipline:

The commonly recognized fields of specialized study are economics, physics, mathematics, space research etc. These are often called intellectual disciplines. Most people agree that accounting is a separate discipline; it is in a way a dynamic discipline in which new procedures and principles are constantly evolving. Other disciplines are also concerned with measurements and information. Thus the boundaries of accounting merge readily and significantly with the boundaries of economics, physics, statistics etc. When accounting is related to and combined with other disciplines, it tends to be more useful than when it stands alone.

A Profession:

The development of accounting as a profession is relatively new. It was stimulated primarily by new forms of economic activity resulting from industrial revolution. The emergence of corporate entity also created a new social need: the need for an independent audit to provide some assurance that management’s financial records were reliable. In fact this audit function, often referred to as the “attest function” wash chiefly responsible for the development of accounting as a profession.

A social force: A third part of accounting is its thrust as a social force. The expansion of a large scale modern business would have been impossible without an adequate financial information system. The separation of ownership and management, a characteristic feature of corporate from of business organizations, is feasible only if reliable periodic financial reports are supplied by professional managers to the owners. Accounting facilitates ownership by remote control. Accounting information is also helpful in the fields of price determination of products, monopoly and restrictive trade practices legislation, the regulation of stock markets, the fixation of rates in public utilities and lot of other similar issues.

A tool of social welfare:

The nature of accounting should not be analyzed in a way that it is confined only to private use of information which has limited scope but which is also concerned with the effect of accounting information on the welfare of individuals as such. The social welfare concept of accounting is related to the impact of information on all the individuals making society. It is clear that the supply of information to one group may give them unfair advantage over the other groups in the decisions which they may subsequently make, resulting in the changes in the allocation of social benefits. The social welfare theory of accounting requires that the interests of employees, trade unions and consumers ought to be taken into account and traditional imbalance existing in the supply of information should be corrected.

A aid in resource management:

The accounting is generally understood as a study of commercial or profit-making activities. The point is that accountant may serve any social unit, large or small, private of public, profit making or not. he serves it by recording the resources at its disposal, who owns these resources and any change which occurs in the amounts held. The accountancy has constantly changed to meet the different requirments of society.

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