Accounting

Definition:

Accounting is a systematic process of recording, organizing, and analyzing  financial activities, which includes income, expenses, and savings. It is essential for  individuals and organizations to manage their finances effectively and make informed  decisions.

Example:

If a student receives ₹500 as pocket money, spends ₹200 on books, and ₹100 on  snacks, accounting allows them to see that ₹200 remains as savings.

How to understand accounting:

Record every financial transaction accurately.

Organize transactions into relevant categories for better clarity.

Analyze the financial data to assess profitability, losses, and savings.

Where Accounting Is Used:

In banks, schools, businesses, households, and government institutions.

Importance of Accounting:

Tracks income and expenses, providing a clear picture of financial health.

Encourages savings by highlighting spending patterns.

Prevents errors by maintaining accurate records, ensuring trust in financial data.