Accounting is a fundamental concept in Business and Finance It is a process of recording transaction, organizing, summarizing, and reporting financial transactions for a business or individuals. No matter the business is of small scale or large one. Understanding basic accounting can help you to make better financial decisions.
Accounting provides structured way to record transactions, maintain ledgers, categorizing expenses, summarizing and making profit and loss easily.
In simple words, every business have major questions like; How much business earned, spend, owe, owned, business is in profit or loss? Answering all questions will be possible if accounting takes their places from recording each business transaction to summarizing it into standard formats.
This guide explains the basics of accounting, important accounting rules, the debit and credit system, and the accounting equation
Why Accounting is Important?
Accounting is important because it shows business activity and financial health of a business.
Financial health of business is good when the business is profitable. Here importance of Accounting begins by measuring the profit and loss of a business which requires recording all business transactions, Categorizing and Summarizing. It helps business in making best financial decisions.