CHAPTER ONE

1.0 Introduction

Accounting is something other than a set of clever devices for beating the income tax with little or on damage to one conscience, something more than specious way of window dressing where the best possible appearance is given to somewhat undesirable stock of goods. It is a universal language of business.

Industry and commercial activities involves, capital, man, material and machines and bring into their compass transportation, finance, insurance, banking and other features of our complex economic life. One common factor could be used to focus these activities. Money in business plays a dual role. Firstly, as physical economic factor of production and secondly as an abstract economic measure of value.

The final reconciliation of all the elements of business is reflected in the account, in term of money and if the value of money changes the fact must be recognised and taken into account. It is necessary to be able to measure the economic value in any combination together with the value of the utility.

One among numerous tasks of accounting is to reduce the multitude of these transactions to its virtual figure of profit and loss. The principle applicable is financial control. The modern technique of management of any business or foremost in its thinking should be: firstly, is to earn profit and secondly, to stay to pay debts as they fall due, of course, there are other objectives of business manager such as providing more goods and services at a lower cost. It meets the two basic task of survival, operating profitability and solvency.

The following question may arise. How do business executives know whether a company is earning profit or incurring losses How do they know whether the company is solvent or insolvent, say a month from today The answer to these question is in one word ACCOUNTING.

Oyebamiji and Adebisi, 2005 defined accounting as the recording of economic events associated with an enterprises using information and data which is usually expressed in numerical and monetary terms, and the communication of the result of this in the form of financial statement to user groups.