What is Accounting?

Accounting can be defined as the process of recording, analyzing and computing the transactions related to business and organization. Accounting supports the management by providing feedback related to the financial statements and transactions of a firm or organization. Accounting can also be referred as the approach to correspond and impart the financial well-being of an organization to the management and related members. It is the means of estimating assets, low of cash, debts and owing etc. of a particular firm. It also helps in visualizing the next entities for future investment. Accounting is considered as the heart and soul of business. Accounting is without a doubt the basic necessity of a business whether it is small scale or large scale.

What are the Accounting Principles?

There are numerous beliefs concerned with documenting of occurrence and transactions in the books of accounting the most crucial aspect is to record the financial transactions must be created in the same manner as final accounts. Let us look at the principles of accounting:

  • Relevance – All the financial and monetary information is treated as significant if it impacts the decisions related to business.
  • Comparability – This principle spotlights the affinity and parallels of business competitors and progression.
  • Reliability – The business information must be away from the unfairness, favoritism and significant errors to retain authenticity.
  • Understandability – The reports focusing the financial statements must be compiled and created in a manner that the ultimate user can apprehend it effortlessly at a glance.

Accounting concepts are the general rules that need to be followed in order to prepare financial accounts and statements.

Important Types of Accounting:

 

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