What is Accounting? Accounting defination

What is Accounting?

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Accounting

Accounting is the process of recording , classifying,

summarizing, and interpreting,  business transaction in the book of account.

1.          Recording

2.          Classifying

3.          Summarizing

4.          Interpreting

1.          Recording

·        Purchase goods from kashif RS = 30,000

·        Sale goods on Amjad RS = 80,000  

·        Sale goods on Fayaz RS = 120,000                         

·        Purchase goods from Naveed RS = 50,000           

·        Paid wages of worker   RS = 3000                             

This process  called recording.

 

2. Classifying

         Purchases Account

Date	Invoice No	Name of suplier	P/R	Amount
		Kashif		30,000
		Naveed		50,000

             Sale Account

Date	Invoice No	Name of cutomer	P/R	Amount
		Amjad		80,000
		Fayaz		120,000

     

      Wages Account

Date	Particular	P/R	Amount
	Wages		3,000

This process  called Classifying.

3. Summarizing

          Purchases Account

Date	Invoice No	Name of suplier	P/R	Amount
		Kashif		30,000
		Naveed		50,000
		Total		80,000

             Sale Account

Date	Invoice No	Name of cutomer	P/R	Amount
		Amjad		80,000
		Fayaz		120,000
		Total		200,000

   

       

               Wages Account

Date	Particular	P/R	Amount
	Wages		3,000
	Total		3000

      This process called summarizing.

4. Interpreting

     

               Sale              =  200,000

 less:   Purchases       =  80,000

            Wages            =  3,000   

            Profit              =  117,000

 

This process called   interpreting