Accounting

Definition:

Accounting is the process of recording, organizing, and understanding all financial  activities, such as income, spending, and savings. It helps individuals and organizations keep  track of their money and make better financial decisions.

Example:

If a student receives ₹500 as pocket money and spends ₹200 on books and ₹100 on  snacks, accounting helps them see that ₹200 is left as savings.

How to understand accounting:

Record every transaction, like earnings and expenses.

Organize these transactions into categories, such as food, travel, and savings.  Analyze the records to understand profits, losses, and savings.

Where Accounting Is Used:

Banks, schools, businesses, households, and government.

Importance of Accounting:

Tracks income and expenses, helping to know how much money is earned and spent.

Encourages saving by making it easier to plan finances.

Avoids mistakes by keeping accurate financial records.