Before understanding the elements of the accounting environment . I want to define accounting environment . Accounting environment can be defined in two sense
- First sense : Accounting environment is the environment of office , accounting staff and provided facilities by boss for making accounts . This is also called physical accounting environment and if this environment is as same as natural environment , it will increase the efficiency of accountant . Suppose there two accountants in two different company , one company provides every facility to accountant for maintaining his accounts but other company has give just second hand computer for making accounts and no other facility is give by second company . Now , you can think about which accounting environment is good and why is it good .
- Second sense : Accounting environment is the environment inside of accounting , means on what principles , rules and concepts , we will have to adopt for making our accounts and study of nature of business is also included in it .
Elements of Accounting Environments
All the factors which affects accounting environments is called elements of accounting . In the elements of accounting environment , we can include laws of companies , legal tax rules and ICAI's Accounting standard from AS 1 to As 32 .In other words elements of accounting environment is synonym of the word GAAP