define a accounting
Answers
Answer:
accounting is the process of identifying, recording, classifying and summarizing, analysis and interpretation and comunicative economic information to the users of accounting
Explanation:
Accounting, also known as, accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations.
Accounting is a mode of collecting, summarising, realising and reporting in the monetary term that helps in making economic decisions of the business.
Accounting is rightly termed as the language of the business. This language act as a mode of communications. It naturally communicates the outcome of various business operations to all the parties concerned or connected with the operation i.e., the proprietor, investors, creditors and other agencies. The basic objective of accounting is to give quantitative information mostly of financial nature about economic matters that are essential for making economic decisions.
Keeping Systematic records of the financial activities of the business and to meet the legal requirement in order to run a smooth business are the functions of the accounting.
Two important functions of accounting:-
To keep Systematic record of the financial activities
To meet legal requirements
There are 8 steps of the accounting process which helps in maintaining all the transactions orderly and correctly in order to get a satisfying financial statement.
Steps in the process of Accounting:-
Identifying transactions
Making Journal Entries of the transactions
Posting the entries in ledgers
Adjusting Trial Balance
Analyzing Worksheets
Recorrecting Journal Entries
Financial Statements
Closing the books
The parties interested in accounting information are internal and external users.
The parties interested in accounting information are divided into two categories, internal users and external users.
Examples of internal users (people inside the business organisation):- Owner, managers and employees.
Examples of External users (people outside the business organisation):- Investors, creditors, banks, suppliers and customers e.t.c.
The two bases of recording accounting information are Cash basis and Accrual basis.