Principles of Accounting Essay Example | Topics and Well Written Essays - 2500 words

Principles of Accounting - Essay ExampleIn simple terms accounting can be also referred to as the language of handicraft because of its determination that helped in recording and processing the financial information that the quick requires for management calculate (Mukherjee & Hanif, 2003 Galanza, 1995). The main purpose of accounting is to provide financial information that is required by an economic unit to enhance the expertness of its operations. The tern economic entity not only signifies a business unit but also the entities that are direct without the purpose of profit-making like the public charities, clubs, churches and government bodies. The accounting information helps in decision making in the disposal. For instance decision like availability of cash while going for purchasing of new equipments or whether the business is running in profit requires the knowledge of accounting information. This accounting information for a business unit is enter by the accountant ( Nobles, et al., 2012). Book keeping Method Book-keeping is referred to as the science and humanities of recording business transactions and opposite financial transactions that are related to any institution, firm and associations of person or company. It is recorded in certain(p) books at regular interval following certain definite rules. It is c aloneed as science because it represents certain systemized knowledge that are based on certain circle of principles, which are followed throughout the process to ensure that the reason for recording the transaction can be explained carefully. On the other hand it is called arts since it involves the human ability and skill for recording the business transaction as per the principles (Kumar & Prasad, 1999). Scope The process of Book keeping involves two significant steps. Firstly the process involves recording of all the transaction in a book called journal. Secondly transferring all the transactions that were previously recorded into a nother(prenominal) book called as ledger. In order to know the net effect of all the transactions the various accounts that are recorded into the ledger are balanced. The main theme of book keeping is to prepare and defend the records till the stage of preparation of Trial Balance (Rao, 2005). Importance Book-keeping serves as the foundation of the entire financial reporting and accounting process. The responsibility of book-keeper is to analyze and record all the financial transaction occurring in an organization. The subject matter total of all the transaction forms the basis of everything that includes grant proposals, cash forecast, budget, tax return and financial reports. The employees and other staff of an organization must understand the goal and mission of a non-profitable organization, in order to achieve their jobs in an effective and professional way. This is particularly true for the accounting system. Each transaction that is being recorded while book-keeping is si gnificant for the volunteers, donors, board members, management, community and employees of the organization. Accurate information delivered in timely manner provides the stakeholders of the organization with the comment regarding the financial health of the organization.