What is Accounting

Accounting is a language and process from which we get net profit, Assets, Liabilities, capital etc as financial information It's steps are 1. Identifying Identify financial events 2. Measuring Assign value in terms of money to the financial information 3. Recording (journal entry) Recording financial events or transactions in the books of business 4. Classifying (ledger posting) Making accounts by classifying financial information on the basis of similarities 5. Summarising (making final accounts) Through this process we get net profit/net loss, capital, Assets, Liabilities, loan etc as information In this process we make final accounts Trading A/c, profit & loss A/c and balance sheet First two are called income statements 6. Analysing Comparing financial information of different years or firms and finding reason of good performance or bad performance 7. Interpreting Explaining result of analysis in own words (it is an art) 8. Communication Communicate financial information through financial report Definition by AICPA, and AAA