American Institute of Certified Public Accountants appointed the Committee on Terminology. They defined Accounting is the art of recording, classifying and summarizing in a substantial manner and in terms of income, transactions and events which are, in portion at least, of a financial character and interpreting the outcomes thereof.” This definition outlines totally the nature and scope of accounting activity. This is a well-known definition.
Any decision need to be evaluated under price-benefit criteria. The rewards must be far more than the cost except in social projects exactly where advantages could be equal to expense. Rewards can be in the form of money return, perks, advantages, customer’s satisfaction or reputation of a business. Whilst price implies value, worth or sacrifice made.
Differential expense is the differece between costs of two alternate opportunities. Suppose, you have a plot of land and are now thinking about regardless of whether to put up a textile unit or an edible unit. The price of land is irrelevant to this choice, it is the differential cost that matter. Suppose the textile unit takes up Rs.500 million whereas the edible oil can be setup with 150 million. The differential cost would be 500 – 150 = 350. It would be relevant expense for this selection.
Of course the much more you really do, the far better you will realize the terminology and vocabulary becoming utilised – which you can then use appropriately in your private statement – at least than your next competing applicant, this then provides you an edge as the admission tutor will see you have at least some understanding already and that you are committed to the course.