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mca assignments answer of MCA3010 - Q1. Explain the process involved in accounting. What are the objectives of accounting?

Answer: Processes involved in Accounting:
1. Identifying the transactions and events – This is the first step in the accounting process. It recognizes the transactions of financial character that are essential to be recorded in the books of accounts. When money, goods, or services are transferred from one person or account to another person or account, it is
known as a transaction.
2. Measuring – This means expressing the value of events and transactions in terms of money. Measuring has become an important challenge for the accountants and the business entities. 
3. Recording – It deals with recording of identified transactions and events in a systematic manner in the books of original entry in accordance with the principles of accountancy.
4. Classifying – All the recorded transactions do not make any sense unless they are processed and presented in a manner that is useful to the intended user. The functions of classifying and summarizing serve this purpose.
5. Summarizing – The end objective of any business is to make profit. To know if this objective was achieved, it is necessary to summarize all the transactions that occurred and are recorded.
This requires analyzing total expenses or losses, total income or gain, total assets, and total liabilities.
6. Analyzing – It deals with the establishment of relationship between the various items or group
of items taken from income statement or balance sheet or both. Its purpose is to identify the financial strengths and weaknesses of an enterprise.
7. Interpreting – This step explains the importance of all the data in a manner that the end users of financial statements can make a meaningful judgment about the financial position and profitability of the business.
8. Communicating – It deals with communicating the analyzed and interpreted data in the form of financial reports or statements to the users of financial information.

Objectives of Accounting
Accounting involves the following objectives:
 Accounting assists in systematic recording of all business events or transactions.
 Accounting measures the financial performance of an enterprise.
 Accounting is required to fulfill the statutory requirements of various regulatory bodies
such as Registrar of Companies, Securities Exchange Board of India (SEBI) income tax
authorities, and the Government.
 Accounting helps in internal control by holding the concerned persons responsible for
any errors, lapses, or under performances.

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