Meaning of Accounting:
Accounting is the language of finance. It conveys the financial position of the firm or business to anyone who wants to know. It helps to translate the workings of a firm into tangible reports that can be compared.
It is the process that helps in recording, summarizing, analysing and reporting the data related to the financial transactions that happen in an organization on a daily or monthly basis.
Recording:
The first process of accounting is Recording which is records of the different transactions that are made within the organization. This can also be referred to as book-keeping which is a process of recognizing the transactions and setting them up as records.
The three different ways of recording are:
- Putting up a system that will help in maintaining the records.
- Tracking financial transactions.
- Aggregating the reports to present a final set of financial reports.
Summarizing:
After the recording of transaction it will divided in to different financial transaction by the help of Summarizing. As a result of this, the accountants divide these raw data into several categories. So the recording of the transactions is then followed up by summarizing.
Reporting:
After summarizing reporting any organization are the responsibility of the management. Therefore, to take care of this, owners receive reports. They receive these reports quarterly and at the end, they receive an annual report that summarizes all their performances.
Analysing
After recording and summary, it is very important to draw conclusions. It is the responsibility of the management to check for the positive and negative points of the financial transactions.
Therefore, to analyse all of this, accounting introduces the concept of comparison. Comparing profits, sales, equity, and so on with one another organization determine and analyse the performance and growth of an organization.
And also check the financial ratio and percentage of growth with previous years and prepare projections for future period.
Objectives of Accounting:
The followings are some major objective of accounting ,
- Accounting will help you analyse financial management and decision-making.
- With counting, you can keep an eye on financial frauds in the organization.
- Accounting contributes to manifesting profits and losses.
Different Subsections of Accounting:
Management Accounting:
Management accounting is the type of accounting that deals with all the management and manager-related information. This type of accounting can help managers take a good look at their employees and make better decisions. Students can find more information from the meaning and scope of management accounting notes.
Cost Accounting:
cost accounting is the process that deals with recording and ultimately analyzing the costs which are made by the company. Students can find more details in the cost accounting meaning nature and scope.
Financial Accounting:
Financial accounting is the type of accounting that deals with the interpretation and the preparation of different financial statements as well as the accounts that are a part of the company as a whole.
