What is accounting?

In the turbulent age of the market economy, more and more people are doing business or would like to start a business. Having entered the economic land of financial relations, the future entrepreneur must understand that all actions that he professionally performs must be reflected and recorded in certain documentation: in the accounting documentation. Otherwise, he runs the risk of getting confused and stumbling in the elementary movement of his incomes and expenses, and even more so in the calculation of taxes, the results of economic activities. Therefore, in any organization should be based accounting. What is it for, what are its main tasks, consider in the article.

Accounting Definition

In order for accounting to take place, the organization must have an accountant or even a whole subdivision called accounting. What does accounting do? And the accounting department collects and stores data on the property and liabilities of the organization or individual entrepreneur, charges salaries and other payments, and maintains tax records.And this is one of the understandings of what accounting is. There is also another, which refers to the process of reflecting the economic operations of an economic entity by a division of a company or represented by a manager. The basis for the accounting is correctly set for the enterprise accounting.

Accounting Definition

Under accounting, they understand an organized system of collecting, registering and summarizing information in monetary terms about the position of property, liabilities and capital of an organization. Also in accounting records all kinds of changes that may be subject to company resources are recorded. The reflection of business transactions takes place continuously, with respect to all operations without exception, and is documented with special documents. Properly keeping accounting, an entrepreneur can solve a whole range of important economic tasks, regardless of what result of activity he is set up for. Whether it is helping people or making a profit.

Accounting Tasks

The word “accounting” itself implies accuracy, control and verification of data.In the same way, many accounting tasks serve to monitor compliance with and fulfillment of contractual obligations, rules for conducting transactions and accounting for them. Accounting also provides a large amount of information about the economic status of the organization. Here are some tasks:

  • monitoring compliance with the rules, regulations, standards and estimates established by law or internal regulations in relation to the conduct of economic activity;
  • control of expediency of economic operations;
  • control of the availability and movement of assets and liabilities;
  • defining the organization’s stock to ensure stability and sustainability;
  • prevention of negative results of economic activity.

As a result, following the tasks leads us to the formation of the main accounting document - financial statements. And this allows us to answer the main question, why do we still need accounting.