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More about Accounting

The finance acts as the blood for the business and accounting as the backbone. Accounting can be defined as an art of recording, summarizing, reporting and analyzing the financial transactions. It means accounting is an art by which one records the financial transactions, summarize them after a particular time of period and find results. These results are put in front of the higher authority by which they analyze position of a particular business and take further decisions.

Book-keeping is the first stage of accounting. A book-keeper records the transactions and accountant analyzes them. The accounting adopts same principles as book keeping. The accounting collects all the data regarding the business for tax calculation, financing activity, managerial and financial reporting etc. A good and skilled account reports all the information which shows the clear picture of the business.
The accounting follows certain rules according to which recording, summarizing and reporting of transactions are to be made. The widely accepted rules and principles are GAAP (Generally Accepted Accounting Principle). In the present time, many companies have become international, so the uniformity of accounts turns into a requirement for showing the results. So every body felt a need of uniform accounting principle, that’s why GAAP came into existence.

Auditing is also a core part of accounting. After book- keeping of the transactions, the work of auditing is started. Auditing tries to find out the discrepancies in accounts, as discrepancies can manipulate the results of the business. The auditing protects the interest of employees, inventors, government and owner from account frauds. Thus, accounting plays a vital role in the business.