Question

Q1. "Accounting takes in the process of Identifying, Recording and Communicating". How would you like to explain the statement? Give support to your answer with examples on Identifying, Recording and Communicating. (3 activity Marks)

Answer 1

Accounting process starts with identifying the economic activities that are happening in the business. Then identified activities are recorded in the chronological order such as voucher, journal, ledger and so on. Then at last communication of information is done with the help of reports and comparison.

Explanation of these are as given below -

Identifying - It is the foremost step in accounting, any economic activity that are happening in the business or related to the business are identified here such as purchase, sale, expenses etc.

Recording - These transactions are now recorded here with proper classification, with time record when it is happen. These are done in form of receipt, vouchers, journals, ledger, worksheets etc.

Communicating - With the help of accounting reports and financial statements, this information is communicated to the interested parties which are external or internal parties. Such as auditors, shareholders etc.

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