Attributes of Accounting

This entry is part 3 of 3 in the series Introduction to Accounting

Accounting is a wider term and includes recording, classifying and summarizing of business transactions in the terms of money, preparation of financial reports, analysis and interpretation of these reports. Attributes of accounting are self-mentioned in the meaning and the definitions of accounting.

Attributes of Accounting

Let’s understand the main attributes of Accounting:

Attributes of Accounting

Attributes of Accounting


First attribute of Accounting. The accounting cycle starts from the recording of business transactions in the books of original entry e.i. Journal. All the transactions of economic nature are recorded in orderly manner in Journal, thus provides a complete record of all the business transactions.


All the transactions are systematically classified in a such way that transactions of similar nature comes at one place, done in a book called ledger. In this books, similar types of transactions are entered under different account heads. For example – all transactions related to cash are posted to Cash Account.


Presenting data in a manner which is useful for the users of accounting information is a summarizing stage. The summarized presentation is done by preparing trial balance and final accounts. This is done with a view to ascertain profile or loss made during a particular period of time.

Analysis and Interpretations

Calculation of various ratios and percentages or application of other techniques are the ways of analyzing the accounting information. Data must be analyzed and interpreted in order to judge the performance of the company and to make sound plans for the future.

Financial Transactions

Only transactions with financial character are recorded in accounting. Financial transactions are those which can be expressed in the terms of money or money’s worth. For example – Unhealthy relationship between the management and the employees can not be recorded in the books of accounts.


The results of analysis and interpretations must be communicated to the users of the accounting information and the parties who are to make decisions. The financial information is communicated in the forms of ratios, percentages, graphs and charts, fund flow statements, income statements and balance sheet.

Understanding attributes of accounting is required to further understand & learn accounting.


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