Features of Accounting

Accounting Meaning

In simple words Accounting refers to record keeping of all financial transactions related to business or an individual. In accounting few words commonly used debit or credit, asset or liability, income or expenditure. Accounting is essential to determine productivity of the business.

Accounting is a art of recording, classifying, summarizing, analysing, interpreting and communicating result's.
Features of Accounting

1) Recording

It's a first and foremost feature of a accounting. Recording is a unique feature. In recording it's records each and every financial transactions related to business or individual. In recording all transactions recorded in detailed manner. In accounting to record transactions journal or subsidiary books are used.

The main aim of recording in the form of journal entry is to  keep systematic record of financial transactions which helps the users to classifying the transaction in different groups.

2) Classifying

Classifying is second feature of accounting. After recoding a journal entry next step is classifying transaction into different groups it's called Ledger. 

In classifying its make a group of similar accounting entries. Classification of transactions done on the basis of journal entry recorded. In Ledger books Capital, Assets, Liability, Income and Expenditure separately opened.

3) Summarizing

Third feature of accounting is summarizing. It's done on the basis of Ledger. In simple words summarizing means summary of ledger books. Summarizing includes 

Ledger Account Balancing.
Trial Balance Preparation.
Trading and Profit and Loss account preparation.
Balance Sheet preparation.


Ledger Account Balancing means finding the difference between debit and credit related to particular account.

Trail Balance means it's a list of all ledger account balance. Trail Balance debit and credit balance always to be equal.

Trading account is prepared to knao the Gross Profit of the business. Profit and Loss account is prepared to know Net Profit.

Balance sheet is prepared to know the financial position of the business.

4) Analysing

In accounting analysing done on Trading and Profit and Loss Account, Balance Sheet. These financial statements are analysed to evaluate business performance and value. Different ratio analysis are used to analyze the accounting data.

5) Interpreting

In Accounting interpreting refer to know about business position. Business performance is evaluated by interpreting. 

6) Communicating

Communicating is the last feature of accounting. It means providing the reports to internal and external users. It's nothing but providing financial information related to business in the form of report.


Conclusion:

Dear readers in this article you get to know about features of a accounting. If any queries comment below.

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