Define accounting.
Accounting is defined as the art of recording, classifying, and summarising in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof.
In a broader sense, accounting is the process of identifying, measuring, recording the business transactions and communicating the required information to the interested users. It is regarded as the language of business as it describes and analyses data of an enterprise through measurement, classification and summarisation, and reduces them into reports and statements.
As an information system, accounting collects data and communicates economic information about the organisation to a wide variety of users whose decisions and actions are related to its performance.
Explanation
This 3-mark answer includes the classic AICPA definition (1941) which covers the traditional aspects of accounting - recording, classifying, summarising, and interpreting. It also incorporates the modern AAA definition (1966) emphasising accounting as a process of identifying, measuring, and communicating economic information. The answer further explains accounting as an information system and 'language of business' as mentioned in the textbook, making it comprehensive and exam-ready.