WHAT IS ACCOUNTING?

The process of recording, summarizing, analyzing, and reporting all the financial transactions that take place in a business's day-to-day routine is called Accounting. In simple words, presenting the financial information in such a manner that it presents the required information to the one who needs it, is done through accounting.

The process of accountancy includes: recording the transactions in a journal book, posting them into ledgers, carrying the balances of ledgers to trial balance, preparing trading account, calculating profit or loss through making profit and loss accounts, and at the end preparing a balance sheet. Analyzing the financial information provided by the balance sheet/statement of affairs and making budgets and financial strategies for the upcoming financial year also come under the broader meaning of accounting. 

Book Keeping

Book-keeping is a part of accounting. It can also be said that the initial stages of accounting come under bookkeeping. The process of recording the financial transaction, posting them into ledgers (ledgers are non-other than the accounts of a particular person/company/thing), calculating balances, posting it into subsidiary books; all this comes under book-keeping. 

Difference Between Accounting, Accountancy, and Accounts.

In day-to-day routine, all these words are used as similar words for each other, but all these words have different meanings in the slightest way. 

Account: a list of all financial transactions related to a single person or thing is called the account of that person or thing. For eg if we say the account of Mr. Ravi, that means all the transactions related to Mr. Ravi will appear on a single list. This list will be called the account of Mr. Ravi. 

An account is one of the primary steps of doing accounting. 

Accounting: the process of maintaining accounts, calculating profit or loss, and preparing financial statements at the end of the financial year is known as accounting.

Accountancy: accountancy is a wider term in this list. The process of accounting comes under accountancy. Accountancy includes preparing and maintaining books of accounts, calculating profits and losses, preparing statements of affairs, analyzing the information provided in the statements of affairs, and presenting it to the one who needs it, and further using this information to make plans for upcoming financial years. 

In this way, it can be said that the work of any accounts manager starts with book-keeping, then it goes towards accounting, and then towards accountancy. the main motive of keeping accounts accurate is not only to calculate profits or losses but also to learn from past experiences and make more systemic strategies for the future.