What is accounting?

A simple explanation is the adoption of a financial or monetary transactions. Not all transactions must be reported. Mostly only business listed personal business rarely registered persons.

For example, you buy a book for $ 10 you give the book seller $ 10; you get the book & receipt for $ 10. More often than not you throw the receipt away; you just want to read the book. The book seller, however, is to operate the company as business registration.

book seller registers $ 10 cash sales and the end of regularity all book sales transactions. It’s easy, counting the money in my previous good amount at the beginning of the day and you have the total sales for the day. The book seller has a problem, how many books were sold, what books were sold and was to make for the day?

Does it matter? That is if the book seller wants to continue trading. This is where accounting or begins to be a bit more complicated.

book seller now has to figure out a few things. How many books were sold is relatively easy, 45 business day so 45 books sold today. Up to $ 10, unlikely, so the book seller must accounting system to record or publish this information. This accounting system should show what books were sold, at what price and how many were sold.

book seller needs this information because tomorrow will be more sales. If there were 10 books entitled “Book 1” day and four were sold then tomorrow there will be only six on the shelf. If four are sold tomorrow, there will be two left for the day after tomorrow. If customers come into the book store to buy “Book 1” and it is not available they will go somewhere else to get it.

It may take a week to get more books after the reservation is made.

So accounting to show the book seller when more books need to be ordered not just how many were sold and at what price. In the example, “Book 1” book seller will have more books come tomorrow or early next day so no book sale is lost. New book series had to be a week ago for there to be no loss of book sales.

What did book seller pay for the books? The information must also be available to show whether profits are made. The simple business of one $ 10 sale is not so simple for the book seller.

accounting is much more than a simple recording financial transactions. Accounting needs to be able to provide more information than the financial amount of the transaction itself.

A better definition would be accounting involves taking all aspects of monetary transactions from financial, physical and non-financial information section.

Mind you, not all transactions are completely money so even better definition is not over when it comes to the definition of accounting. Accounting involves so many different areas of business that any definition is always going to be controversial, especially among accountants.