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Accounting is the process of recording, summarizing, analyzing, and interpreting financial transactions and information of a business or organization. It involves systematically capturing, organizing, and reporting financial data to provide an accurate and comprehensive view of the company’s financial position and performance.

The primary objectives of accounting are as follows:

  1. Recording Transactions: Accounting starts with the recording of financial transactions, which include purchases, sales, expenses, revenues, and other business activities. These transactions are initially recorded in the books of original entry, such as journals and ledgers.

  2. Classifying and Categorizing: Once recorded, the transactions are classified and categorized into various accounts based on their nature, such as assets, liabilities, equity, revenue, and expenses. This process is known as double-entry bookkeeping, where each transaction has an equal debit and credit entry.