Accounting is most important in any Business in the world. Histry of Accounting is million years.In holy book"RAMAYANA",When "BHAGWAN RAMA" was came to ayodhya-nagari after 14 year of "VANVAS" and enter in ayodhya first of all he ask to his younger brother BHARAT about last 14 year's account of treasury(Rajkosh) of ayodhya.so that we can say that importance of accounting is very huge from many years,
I just told you what the purpose of accounting was, let's talk about important of accounting. Do you remember being a child, and it seemed that as soon as you were given money it was gone?'If company is running this way....
'Now, can you imagine how well a company could run if they had no idea where their money went? I feel safe in predicting that the majority of companies out there would be in ruins and so would the entire economy. In order to even have a hope of success, a company has to know where their money is coming from and where it's going out. That's the importance of accounting and of the financial statements.'
Now, I explain "What is financial statements?",
There are four main financial statements that are created in the accounting cycle. And just so you know, they are created in a specific pattern. The first financial statement is the income and expenses statement, which tells how much money was made or lost in a given time period. Next is the statement of retained earnings, which tells how much money that was made was reinvested into the company. The third statement is the balance sheet. The balance sheet is the financial statement that lists all the assets, liabilities, and owner's equity of the company. It's important to note here that the accounting equation is also known as the balance sheet equation. The last financial statement is the statement of cash flows, which tells how much money came in and was paid out in a specific time period.'
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