It is a record in general ledger which is used to collect and record the credit and debit information. Entries are first passed in journals and then posted in ledgers. Accounting is the language of business, as it benefits the business in many ways. It helps a businessman to know about the profit and loss. An account is completely based on numbers. One of the advantages of accounts is that it is reliable. Accounting reports can be analyzed to provide financial information to the company that can be used to run a business and plans ahead what changes need to be done. Accounts are prepared to fulfill the following purpose-
- Maintain accounting records
- Communicate financial position of a company
- Calculate the results of operation undertaken
Account users can be internal and external, internal users are employees and management. External users include investors, creditors, financial institutions etc. Accounts are a scientific process of identifying, recording, analyzing, summarizing, interpreting monetary transactions. Accounting information can be used as evidence in legal matters. Transactions are recorded in a systematic manner to get the answer easily and accurately when needed. It is the systematic and comprehensive recording of the transactions to pertain a business.
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