What is Accounting
Accounting is an art that helps us to calculate, analyze and compare the financial growth of business organizations. It is also possible to estimate the effect of recession by the use of a few terms, formulas as well as with a few other record tracking devices. The American Institute of Certified accountants defines accounting as the art of classifying, recording and summarizing a business venture in terms of transactions and money. The primary goal of accounting is to calculate and record equity, liability and assets pertaining to a business organization. Accounting helps us to easily understand and analyze the financial status of an organization as well.
Accounting-Integral Part of a Business Organization
Accounting is a potent tool that empowers the business executives to evaluate the financial strength of a business organization and helping it in its success. Accounting also helps business executives to set realistic goals for future business prospects and to make proper and perfect decisions that can affect the business organization in a perfect way. The business employees and stockholders can keep themselves updated about the latest business happenings as well.
There can be no second thought about the fact that accounting has gained paramount importance as an educational discipline as well. Accounting is a vital branch of education that enables the organizational owners to evaluate the financial status of a business. Most of the leading schools and colleges offer special courses on accounting. Accounting is also taught in high-school classes and technical schools. It has been over centuries that accounting has been taught and practiced as a specialized educational discipline. It is mandatory for an individual to receive some sort of training before one expects to manage an entire department or business organization.
Importance of Accounting
The basic equation for accounting stands as Assets=liabilities + stockholders equity. The above-mentioned formula is the foundation of every business organization. This is entirely the responsibility of the accountant to look after the well-being of the business health and stockholder equity. The accountant conveys the feedback to the stockholders. The task of an accountant is vital for ensuring the overall stability of the business organization. It is necessary for every business organization to be on the top of the financial ladder to ensure steady growth and secured financial strength.
In order to get a basic understanding of accounting it is mandatory to explore the basic accounting concepts as well. One should always strive to understand the main terminology and accounting definitions as it will help to master the accounting principle properly. Accounting primarily deals with current assets and examples of current assets include prepaid expenses, marketable securities, accounts receivable and inventory as well. The importance of accounting and its effects on the overall business growth can be estimated only by learning the accounting basics.