1.1 Definition of Accounting

Accounting involves recording of financial transactions for decision making. According to Wood and Sangster (2005) it can be defined as an organized recording of transactions having a financial impact in a business and availing the same on a timely basis to decision makers. To harmonize reporting and enhance comparability of accounting information from different entities and also for the same entity over a period of time, the profession has developed a reporting framework that guides recognition and measurement of accounting elements.

Organisations often referred to as, reporting entities, are expected to follow the reporting framework when measuring their financial worth. This is however supposed to follow the general accounting equation. The profession is also based on some assumptions and principles (accounting concepts and conventions) which are generally applied. Professionals in this field are referred to as accountants. They play a vital role in providing information that is useful for decision making. However, for sound decisions to be made, such information should meet the various tenets of quality. This calls for the accountants to adhere to their professional ethics. A number of professional bodies are on the lookout to ensure that these are adhered to.