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What is accounting?

Accounting is used at the most basic levels in our day to day lives. It is referred to as the process of systematically recording and reporting and even analyzing financial transactions. On a professional level accounting processes are generally taken care of by an accountant who follows a set of pre-determined rules as far as financials of the company in question are concerned. Accountancy is an essential part of the functioning of a company. It is used not only to maintain cash flows, but it is also used to analyze a company’s growth prospects, performance, forecasting, etc. Proper accounting procedures are also required to maintain balance sheets and ledgers. Put in a nutshell and very simply, accounting deals with the financial operations of a company, thus helping it to grow, expand or simply maintain its current status.

Why study accounting?

The most obvious reason that one would study accounting is if one were to look for a career in accounting. If you intend on being a part of the finance department in any organization, you will need the basic knowledge of accounting in order to understand and do your job better. This knowledge will help you understand the financial condition of your business, whether your current endeavors have resulted in profits, is your production costs within your budgets etc. It will also help you plan the future of your business based on the past performances. Accountancy also helps businesses manage their stocks if they are a production company. It helps to decide on whether or not a product is suitable for the market based on its financial performance. Another important aspect of accountancy is taxation. Accounting helps businesses maintain proper books for the purpose of taxes. Part of the job of an accountant is to make sure that business operate within the purview of the taxation laws of the state that they are in.