what is accounting pls explain briefly and all the things and ways..
Answers
Answer:
Accounting is the recording of financial transactions along with storing, sorting, retrieving, summarizing, and presenting the results in various reports and analyses. Accounting is also a field of study and profession dedicated to carrying out those tasks.
Answer:
The present age is the age of trade business and commerce. After Globalisation, liberalization, and privatization, business is increasing day by day and becoming complex also. An organization cannot remember all its dealing for long. Therefore, it becomes necessary to keep a written record of all business transactions day by day, this lead to the development of accounting. Let us understand the meaning of basic accounting.Meaning of Accounting
Lucas Pacioli is considered to be the Father of modern bookkeeping. The only recording of financial transactions in bookkeeping is not enough to achieve the commercial objective, but also it is important to know the financial result.
It is necessary that the recorded transaction is collected, classified and summarised. This work is done by accounting. After identifying the financial transaction, through the basic accounting process, these are recorded properly in a systematic manner in the books. The meaning of accounting can be made clearer by understanding its process and components.
Accounting is a systematic process of identifying recording measuring classify verifying some rising interpreter and communicating financial information. It reveals profit or loss for a given period and the value and the nature of a firm’s assets and liabilities and owners’ equity.
In other words, accounting is a practice and body of knowledge concerned primarily with
Method for recording transactions,
Keeping a financial record,
Performing internal audit
Reporting and analyzing financial information to the management and
Advising on taxation matters.
Definitions of Accounting
Some prominent definitions of accounting to help us better understand the meaning of basic accounting.
According to the Committee of Terminology of American Institute of Certified Public Account:” Accounting is the art of recording, classifying summarising in a significant manner and in terms of money, transaction, and events which are, in part at least of a financial character and interpreting the results thereof.”
According to Bierman and Drebin:” Accounting may be defined as identifying, measuring, recording and communicating of financial information.”
Therefore accounting can be defined as” the process of recording, summarising, reporting and analyzing required financial information relating to the economic events of an organization to the interested users for making decisions.”
Components of Basic Accounting
1. Recording
The primary function of accounting is to make records of all transactions that the firm enters into. For the purpose of recording, the accountant maintains a set of books. Their procedures are very systematic. Nowadays, the computer has been deployed to automatically account for transactions as they happen.
2. Summarising
Recording of transactions creates raw data. Sentences of road 8000 of little used to in organization for decision making. Pages and pages of raw data are of little use to an organization for decision making. For this reason, the accountant classifies data into categories.
3. Reporting
Management is answerable to the investors about the company’s state of affairs. The operations that are being financed with the money of owners, it needs to be periodically updated to them. For this reason, there are periodic reports annually summarising the performance of all four quarters which are sent to them.
In the form of financial statements reporting is done. To ensure that there is no misleading financial reporting, these financial statements are also regulated by government bodies.
Learn more about Qualitative Characteristics, Objectives, and Roles of Accounting here in detail
4. Analyzing
Lastly, accounting entails conducting an analysis of the result. After results have been summarised and reported, a meaningful conclusion needs to be drawn. Management must find out its positive and negative points. Accounting helps in doing so by means of comparison. It is common factors to compare profit, cash, sales, and assets, etc. with each other to analyze the performance of the business.
Thus accounting is a language of business. It communicates the performance of the business with various end-users who are interested to know about the business. Accounting provides quantitative information of financial nature to both management and other users so that they can take a proper decision about the business.
Thus accounting is a language of business. It communicates the performance of the business with various end-users who are interested to know about the business. Accounting provides quantitative information of financial nature to both management and other users so that they can take a proper decision about the business.