Relationship of Accounting with other Disciplines

In this tutorial, we will learn about the relationship of accounting with other disciplines of accounting when one has a strong conceptual understanding of other interconnected disciplines.

 The other regulations which accounting increasingly seen to interact with are Economics, Mathematics, Statistics, Law, and Management. 

Accounting is a science related to human activities to fulfill demand with limited wealth. It provides all the required financial information to individual buyers and sellers for making an economic decision.

Accounting and Economics: Economics is a view as a science of demand and supply, and accounting is the business’s language, where economics talks about satisfying human wants by efficiently using scarce resources.

Accounting overlaps economics in many aspects. It contributed to improving the decision-making process of management.

Accountants have ideas about income, capital, and value from economists, applying it in practical circumstances.

Accounting and Statistics:

The Accounting information is precise to the point and exact to the last paisa. For decision-making, such precision is not necessary, so a statistical approach comes to the sought.

Statistical presentation by graphs, pie-charts, etc. of the accounting information make is to ascertain the enterprise’s growth. A lot of figures from books of accounts can generalize to a single graph or pie-chart.

Statistics also help in formulating prices, ratios that are to be calculated using statistical tools. Accounting and financial calculations are based on analytical formulae.

Therefore the study of statistics provides an extra edge to accounting.

Accounting and Mathematics: 

Double-entry book-keeping can convert in an algebraic form; in fact, the first book on this subject was part of a treatise on algebra.

Knowledge of algebra and arithmetic is an essential requirement for accounting computations and measurements. Calculations of interests, annuity, etc. are examples of such uses.

Presently, graphs and charts extensively used for communicating accounting information. In addition to statistical knowledge in geometry and learning in trigonometry, it seems essential to have a better understanding of the accounting.

Accounting and Law:

An economic entity operates within a legal environment. All transactions with government, suppliers, and customers governed by the contract act, the sales of goods act and the negotiable instruments act, etc.

The entity itself created and operated by-laws and acts. For example, a partnership governed by the Indian Partnership Act. A company created by the Companies Act and also controlled by the law.

Laws guide every transaction and event. Every country has a set of economic policies, fiscal, and labor rules. Very often, the accounting system used has been prescribed by the law. For example, the financial statements made by the company are to be made under the norms, rules, regulations, and standards given by the Companies Act.

Accounting and Management: 

Management is a wide-ranging occupational field that incorporates many functions and encompasses many areas or branches of learning. Accountants are well placed in the management and play a vital role in the administration. A large portion of accounting is done to make managerial decisions. Although management relies on other data sources, accounting data are used as essential source documents.