Accounting Text Lesson

Introduction to Accounting

Accounting is not just about numbers—it's a critical tool for business strategy

Study Duration

5 Min

Introduction
In any organisation, accounting is one of the most important tasks. Accounting is defined by
the American Accounting Association (AAA) as "the process of identifying, measuring, and
communicating economic information to permit users of the information to make informed
judgments and decisions."
In its earliest form, accounting focused mainly on proper scorekeeping and profit reporting.
However, accounting practises have advanced to cover broader business activities and
applications, such as the strategic management of costs and value creation through efficient
resource utilisation.

Definition, Functions and Roles of Cost and Management Accounting
Definition of Cost and Management Accounting
The Chartered Institute of Management Accountants (CIMA) defines the following:

Cost Accounting

“the application of accounting and costing principles, methods and techniques in the
ascertainment of costs and the analysis of savings and/or excess as compared with previous
experience or standards”.

Management Accounting

“the application of professional knowledge and skill in the preparation and presentation of
accounting information in such a way as to assist management in the formulation of policies,
and in the planning and control of operations of the undertaking”.

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