As defined as accounting, by Professor of Accounting at the University of Michigan William Paton, as having one basic function: "Facilitate management of economic activities This function includes 1) Economic data measurement and array, 2 There is a closely related phase of communicating the results of this process to stakeholders.
As an example, the company's accountant periodically measures profit and loss for the month, quarter or fiscal year and announces these results in the income statement called the profit and loss statement. These statements include factors such as accounts receivable (payable to the company) and accounts payable (payable to the company). You can also get quite complicated with subjects like retained earnings and accelerated depreciation. This is done at the higher level of accounting, within the organization.
Lots of accounting but also are also concerned with basic bookkeeping. This is the process of recording all transactions.
However, owners of the owners of the shareholders or the owners of the companies that can be millions of people are most concerned about the summary of these transactions included in the financial statements. The financial statements summarize the assets of the company. The value of the asset is what it took when it was first obtained. In the financial statements, the source of assets is also recorded. Some assets are in the form of loans that need to be repaid. Earnings are also business assets.
In what is called double entry bookkeeping, liabilities are also summarized. Obviously, the company would like to show higher amounts of assets to offset the debt and show profits. Management of these two elements is the essence of accounting.
There is a system for doing this; not every company or individual can devise its own system for accounting; the outcome is disorderly!
What is accounting?
People who worked in the office at some point needed to go to the treasurer. They are people who pay and send bills that keep the business moving. They will do much more than that. Sometimes referred to as "bean counters" they also monitor profits, costs and losses. Unless you are running your own business and acting as your own accountant, only you how profitable - or not
We check, accounting for a balance that can be any business. It is part of a child's life. Save money and spend everything at once - this is an accounting principle.
What is another business whose accounting is critical? Well, farmers need to follow prudent accounting. Many of them run their farm every year by taking loans to plant crops. If it is a good year, a profitable one, they can pay off their loan.
Every business and all individuals need some accounting system in their lives. Otherwise, finance does not know what you can get from them, or whether you can expect benefits or losses from their business. If you are smart, it is routinely not necessary to stay on accounting, whether it is for billions of dollar business or for personal checking account, bounce check or company shareholder You can mean something from posting losses to. Both scenarios are equally devastating.
Accounting is basically information, and this information is posted regularly in business as an income statement or income statement.
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