Accounting is a way of recording, analyzing, and summarizing transactions business.

o Transactions are recorded “books of prime entry”

o the transaction is identified and placed on the ledger

o Finally, the transaction together in the financial statements

need accounts

If the company runs efficiently, why it has to go through all the bother of accounting to produce financial information?

A company should produce information on their activities because there are various groups of people who want or need to know that information. This sounds rather vague, to make it clearer, we should look more closely at the categories of people who may have information. We also need to think about what information is especially interesting members of each category.

Users of financial statements and accounting information

people who might be interested in the financial details of a large public company can be classified as follows

o Management.

o shareholders.

o Trade contacts.

o Providers of finance for the company.

o Inland Revenue.

o the company’s employees.

o Analysts and consultants.

o Government and their agencies.

o public.

Accounting information in financial statements to satisfy the information needs of these different groups,

not competitive

It is not only companies that are required to prepare accounts, charities and clubs also prepare financial statements every year. The accounts also need to be ready for the official establishment.

Key Accounting Statements

business are presented in the financial statements. The two main financial statements are the balance sheet item. Both the balance sheet and income statement are summaries gathered data

Balance Sheet -. Is simply a list of all assets owned and all debts owned by the company at a specific date. It shows the financial position at a given moment

A profit and loss -. Is there a record of income and expenditure in a given period.

period chosen depends on the purpose of the declaration is made, that time called the financial year.