Introduction to Basic Accounting by Tarannum Khatri - HTML preview

Accounting is system of financial reporting that identifies , records and communicate transactions and result of business.

Three important elements of accounting are

1. Identification: In account, first accountant is needed  to  identify the transaction and decide whether it should be recorded or not. He applies accounting principles in this process.
2. Recording: After that, he records the transaction as per double entry system or accounting equation and following accounting cycle process.

Communication: Finally, financial statements are prepared from accounts and the result of business and position of assets and liabilities are communicated to stakeholders and management.

Through accounting, we can know result of business. Accounting is tool to measure result of business and leads to future plans.

Can you imagine Amazon without accounts? How can it measure sales without account management? How can it design growth strategy without accounts? How can it publish revenue and income reports to its stakeholders without maintaining accounts?

Account is simple but necessity in each business. From small proprietor to global enterprise, Accounting is must.

That’s why it is necessary that each should get basic accounting knowledge to understand and do financial transactions smoothly in day to day life.