What is the meaning of economic activity?
Accounting discipline has been developed to serve this purpose as it deals with the measurement of economic activities involving the inflow and outflow of economic resources, which help to develop useful information for the decision-making process, therefore before going to understand accounting basics, we need to understand the meaning of economic activity.
Accounting has a universal application for recording transactions and events and presenting suitable information to aid decision-making regarding any type of economic activity ranging from family function to functions of the national government.
Economic Activity and Accounting:
Economics activities are those activities that are associated with the production, exchange, distribution, and consumption of merchandise, at every level of society. These activities are performed with the sole aim of earning money and producing wealth, to satisfy human wants, with limited resources. These activities form a basis for the economic development of the country as it adds value to the gross domestic product.
Every individual performs some kind of economic activity like Salaried person gets a monthly salary against his job/services and this amount of Salary they have spent on food/provisions and other ways according to his priority and requirement of a family (i.e. benefit of the family )e.g- Clothing, Children’s education, House rent, Electricity, etc.
Like individual Business Entities, Organisations, Companies, Governments, Municipal Corporations, etc all carry some kind of economic activity and it is not necessarily all economic activities that are run for any individual benefit and it may be create social benefit .i.e benefit for the public at large.
In Accounting Language, These Economic activities have been performed by individuals, Business Entities, Organisations, Companies, Governments, Municipal Corporations, etc through transactions and events. therefore for learning of accounting it is much necessary to understand Transactions and events.
For more details about transactions and events please read our next article/ blog
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