A Brief Study of Balance Sheets.

Abstract Accounting has been defined as "the act of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof." Accounting is an art, not a science. It has two major functions: to record and classify events and transactions which are, in part at least, of a financial character, and to summarize, analyze, and interpret the records. A more significant definition would be of inestimable value to students and laymen alike—perhaps to accountants themselves. Unfortunately, it is not possible to reduce a complex subject to simple terms. Accountants use many common words, such as profit, loss, income, expense, and capital, with a variety of meanings, and with meanings that frequently differ from those of every-day life. The accountant's attempt to give common words a chosen meaning—neither more nor less—is not always successful, and it is therefore important to take heed. But accounting is nevertheless an act, and its terms, no matter how common, have meaning with reference to accounting operations.