Exploring Mental Accounting Through Financial Accounting: An Elementary Approach

Abstract

This paper makes a novel attempt to analyse the mental accounting process through the eyes of financial accounting. Financial accounting is pretty familiar in the accounting and overall commerce domain. But still, mental accounting is not much familiar among the masses. Financial accounting is a process that is employed by those companies which are supposed to follow the process by law. But the interesting fact is that every person is knowingly or unknowingly going through the mental accounting process in their day-to-day life. So, the paradox is that people are knowingly or unknowingly people involved but they are not familiar with that. The awareness of mental accounting can put people into an uncomfortable position as they are comfortable in feeling they are rational. Even though it is said unfamiliar to many, it has got a rich existing literature in its mother field of behavioural economics.