Accounting can be defined as "recording, classifying and summarizing financial transactions and financial events and understanding their results". In simple words we can say:
(1) The results of the interpretation of the classification and summary
(5) of the Financial Accounting
Accounting is a good record of daily business transactions His art: The science of keeping business records systematically and systematically, business results are minimal in trouble. They are therefore said to be a statistical procedure for collecting, classifying and summarizing financial information.
The purpose of accounting is twofold:
(1) Fix all transactions and
(2) all transactions and the combined effect of all such transactions for a given period in order to establish a business profit or loss, and to know the right financial situation at a given time.
The necessity and significance of bookkeeping can be understood by answering the following questions:
(1) How much did we get this year?
(2) How much did you deserve over the last year?
(3) Does our business improve?
(4) How much cash is there?
(5) How Much Money Is There?
(6) How Much Does It Cost To Others?
The accounting system has different accounting systems:
Accounting Cash System
This system is only cash inflow and the assumption that there are no credit transactions. If there are any credit transactions at all, they are not recorded at all until the cash is actually paid or not received. The best example of the cash system is clubs, societies, hospitals, educational institutions, lawyers, etc. Your earnings and payment account.
Single Gateway System
This system ignores the double aspects of each transaction as we consider it in the dual entry system. Under an introductory system, the purely personal aspects of the transaction, ie personal accounts, are recorded. This method does not take into account non-personal aspects of transactions such as cash. It does not provide checks on mission accuracy and fraud protection as it does not provide checks to capture cash transactions. This is why it is called "imperfect accounting".
Dual Entry System
The dual entry system was first discovered by Luca Pacioliin, a Franciscan monk in Italy. Over time, the system has undergone many stages of development. This is the only method that meets all the objectives of regular accounting. Recognize the duplicate aspects of every business transaction.
These issues are crucial to the trader, and answers can only come from the latest financial records. Only a perfect record of all business transactions can help the owner know the amount he has earned or lost.
The ultimate goal of every business is to maximize profits with minimum spend. Based on these, the trading organization is always trying to expand its business, increase its sales and reduce operating costs. The progress made in this respect is always indicated by properly maintained financial data. The main purpose of accounting was to establish a business result (ie gain or loss of loss) over a year, presenting the financial position of a business as at a given time. Accounting must meet the requirements of tax authorities; investors, government regulations; management and owners.
"Accounting for cash flow and events that are partly at least partially captured, classified and aggregated, is financial in nature and interprets the results." In simple words, science creates a causal link, while art is the use of knowledge that contains certain accepted theories, principles and rules. Since accounting documents do not cause any causal link, it only provides us with the method by which accounting goals can be achieved, therefore accounting is art and not science. Accounting is the art of registering financial transactions in a book suite; list and summarize the information in the categories to be presented to the persons concerned in the appropriate way. Accountancy
The need for an accounting system has previously been felt in the history of trade and commerce. The art of bookkeeping is as old as art of commerce. This art of records has been going through many phases since the beginning. The development of trade has played a significant role. Indeed, it can be said that the basis for accounting is the whole structure of the modem trade.
Although an ordinary trader has no legal obligation to keep records, every business house considers regular records as indispensable and convenient to know exactly where it is. In addition, it legally compels certain business forms, such as public limited companies, to regularly record in the appropriate form of business premises. Appropriate and satisfactory accounting methods are an essential part of any business house for the following reasons:
(1) If there is no record, it may be difficult to establish a precise net profit. In such circumstances, the tax authorities may overestimate the profits and thus the trader will suffer because he does not keep the business records.
2. In the absence of appropriate business records, a trader may find it difficult to substantiate the actual situation of the court if he becomes insolvent.
(3) Keeping proper records helps the trader to shape future business plans and policies.
(4) It is difficult to establish and record the price to be sold or disposed of if there is no record.
(5) Lastly, despite the best memory, the merchant's capacity exceeds the number of return transactions business transactions.