Accounting is a system comprising the following elements: In summary Accounting is the process of identifying, measuring and communicating business information to assist users in making informed, useful decisions.
Only monetary transactions are recorded in accounting using the historical and monetary principles.
This simply means that only transactions that can be recorded in monetary terms are recorded and this is done on a historical basis i.e. we only record those amounts that we actually expended or received.
Capital-any resources; monetary or otherwise used by the business to start a business.