What is Accounting?
Accounting is the process by which one can record all financial transactions to get the account of loss and profit at the end of the year and make decisions.
Accounting is the process of recording transactions and financial information about a business. It includes tracking income and expenses, preparing reports, and analyzing data. In addition to being used by businesses, accountants are often hired by individuals and government agencies to keep track of personal finances.
Definition of Accounting
Accounting is the practice of keeping records of money coming in and going out of a company. These records are called accounts. An accountant keeps track of these accounts using various tools, including ledgers, journals, and computers.
Types of Accounting
There are two types of accounting:
- General, and
- Specific.
General accounting tracks all the transactions of a business, regardless of what type of product or service they provide. Specific accounting tracks only those transactions related to a particular product or service.
General Accounting
A general ledger is a record of all the transactions that occur in a business. A general ledger contains three major sections: assets, liabilities, and equity. Assets are items owned by a business, such as cash, inventory, buildings, vehicles, etc. Liabilities are debts owed by a business, such as mortgages, bonds, loans, etc. Equity refers to owning shares of a business.
Specific Accounting
A separate set of books is kept for each product or service produced by a business. Each book contains entries for sales, purchases, and any other transactions related to that product or service.
Journals
An accountant uses journals to write down transactions that have occurred. Journals are divided into daily, weekly, monthly, quarterly, and annual categories. Daily journals are written at the end of each day. Weekly journals are written after the week ends. Monthly journals are written after the month ends. Quarterly journals are written after the quarter ends. Annual journals are written after the year ends.
Computerized Accounting
Most modern companies use computerized accounting systems to track their transactions. Computerized accounting systems help accountants create accurate reports and analyze data. They allow for faster processing of transactions and easier access to information.