What is Accounting?

Accounting is the process of recording, organizing, summarizing, and reporting financial transactions of a person, business, or organization.

In simple terms: Accounting helps you track money where it comes from and where it goes.

Example:

If you own a small shop:

Money you earn from sales = income

Money you spend on products, rent, etc. = expenses

Accounting helps you:

Know if you are earning or losing money

Make better financial decisions

Keep records for reports or taxes

Key parts of accounting:

Recording writing down all transactions

Classifying grouping similar transactions (like expenses, income)

Summarizing making reports (like total income)

Reporting showing results (like financial statements)

Simple definition:

Accounting is the language of business because it shows the financial health of a business.