Business-Accounting

Accounting

Accounting is the process of recording, classifying and summarizing financial transactions in a meaningful format to communicate information to its intended users.

Accounting Process

Financial transactions - Recording - classifying - summarizing - analysis and interpretation - communication.

Identify a financial transaction

Records only monetary transactions and events which cannot be measured in money are not recorded in the books of account

Recording

Recording is the process of entering business transactions to the Journal also called the book of original entry

Classifying

The process of grouping transactions of one nature at one place. The transactions recorded in the Journal are posted to the main book of account called the Ledger.

Summarizing

Presenting the classified data in an understandable manner and preparing financial statements

Analysis & Interpretation

Analysing financial data so the users can make a judgement about the profitability and financial position of the business

Communication

Communicating financial information to its internal and external users