Paper Topic:

Accounting

Introduction - Purpose of Accounting

The definition of accounting is a useful approach through which the salient aspects of accounting are outlined . Accounting can be defined as the process through which business transactions are recorded classified , reported and interpreted to interested users in order to help them in their economic decisions . Therefore , the purpose of accounting is mainly two fold , to record business transactions in such a way that they are reported to people /entities to help them in the decision-making process . In order to amplify more clearly the above premise it

is important that the way financial information is reported and the economic needs of these users is outlined . This will be conducted in the proceeding sections

Four Basic Financial Statements

Apart the double-entry bookkeeping , through which all business transactions are recorded in accounts and classified in ledgers , the main final report provided to interested users is in the financial statements . The financial statements are a financial document that encompasses four main statements . These are the following : The Income Statement , The Balance Sheet , The Statement of Cash Flows and The Statement of Changes in Equity . Despite portraying different information needs the aforesaid statements are interrelated together in order to portray one final image of the organization . They also use information from each statement , which results in a sequence through which they are prepared

The Income Statement is the first statement prepared , which portrays the profitability of the organization during a particular time frame . This will serve to assess the financial...

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