What is Accounting?
Accounting is the systematic process of recording, analyzing, and reporting financial transactions of a business or individual. It involves tracking income, expenses, assets, and liabilities to provide a clear financial picture and ensure compliance with financial regulations.
Key Components
- Bookkeeping: Daily recording of financial transactions (sales, purchases, receipts, payments).
- Financial Reporting: Preparing income statement, balance sheet, and cash flow statement.
- Tax Accounting: Calculating tax, preparing returns, ensuring compliance.
- Auditing: Independent review of records to ensure accuracy and integrity.
- Management Accounting: Budgeting, forecasting, and performance analysis for decisions.
How Accounting is Used
- Business Management: Informs decisions, resource allocation, and growth plans.
- Compliance: Keeps operations aligned with regulations and standards.
- Personal Finance: Budgeting, investment tracking, and tax obligations.
Why Accounting Matters
Accounting underpins financial order, transparency, and smart decision-making—it’s the backbone of sustainable growth for individuals and organizations.
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