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As known, accounting is considered as consisting of two elements, recording and summarising. It’s a kind of count method and tool.
Transactions must be recorded as they occur in order to provide up-to-date information for management. The transtions for a period are summarised in order to provide information about the performance and positon of a business to inerested parties.
The purpose of accounting is to provide information to users of financial statments. The main users include: management, shareholders and potential shareholders, employees and their trade union repersentatives, lenders, government agencies, the business contact group and the public.
There are three main financial accounting statements: the balance sheet, the income statement and the cash flow. And you need know the accounting policies and explanatory notes. According to the financial statements and operational information, you can analyse the finance of the enterprise.
Especially, some criteria should be identified: relevance, reliability, comparability, understandability, completeness, lack of bias and timeliness.
As we saw above, these are the basic of accounting. The more you learn, the more you’ll understand.
