Following processes are followed in the accounting :
1. Identification of financial transactions: In accounting, only those transactions which are of financial nature are recorded in the books of accounts. If a transaction do not have financial character then such transactions are not recorded.
2. Recording of financial transactions: In accounting, financial transactions are recorded in systematic way in a book called "journal." This book is further sub-divided into various subsidiary books such as Cash Book, Purchase Book, Sales Book, Purchase Return Book and Sales Return Book.
3. Classifying of financial transactions: There may be thousands of records and it may be troublesome to find out details about a particular transaction. So, for the easy location of the transaction, the transactions of same nature are grouped into one place by opening accounts in a book called "ledger."
4. Summarizing: The classified information may be large in number and the users of accounting information may not have time to go through all the records. So, for presenting the data in concise manner, summarizing is done. It includes preparation of trading account, profit and loss account and balance sheet.
5. Communicating: The processed information have to be communicated to those people who have to make the use of them like owners, managers, creditors,etc. Communicating is done through an annual report.
1. Identification of financial transactions: In accounting, only those transactions which are of financial nature are recorded in the books of accounts. If a transaction do not have financial character then such transactions are not recorded.
2. Recording of financial transactions: In accounting, financial transactions are recorded in systematic way in a book called "journal." This book is further sub-divided into various subsidiary books such as Cash Book, Purchase Book, Sales Book, Purchase Return Book and Sales Return Book.
3. Classifying of financial transactions: There may be thousands of records and it may be troublesome to find out details about a particular transaction. So, for the easy location of the transaction, the transactions of same nature are grouped into one place by opening accounts in a book called "ledger."
4. Summarizing: The classified information may be large in number and the users of accounting information may not have time to go through all the records. So, for presenting the data in concise manner, summarizing is done. It includes preparation of trading account, profit and loss account and balance sheet.
5. Communicating: The processed information have to be communicated to those people who have to make the use of them like owners, managers, creditors,etc. Communicating is done through an annual report.
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