Chapter 1, Problem 1Q

To determine

Accounting: It refers to a financial language for all the business organizations at global level. The process of accounting starts with identification of business transactions quantitative in nature then goes further with recording of the identified transactions, classification of similar recorded transactions then summarization of these classified transactions, after summarization, all data is analyzed to calculate the profit and financial position of the company. This process ends with the communication of analyzed information to its users.

To Explain: “Accounting is ingrained in our society and it is vital to our economic system.”

Answer to Problem 1Q

The given statement is true.

Explanation of Solution

• There are various users (owner, employees, government, creditors and investors) of accounting information and these users are the part of our society.
• Accounting information shows the performance of business organizations in financial terms and its survival in the market.
• The owner also needs accounting information for decision making to operate the business efficiently.
• Therefore, accounting plays a very important role in our economic system.

Conclusion

The given statement “Accounting is ingrained in our society and it is vital to our economic system” is completely true.