Genesis of Business Accounting

Accounting is the art of classifying, summarizing and recording the transactions of the business in a prescribed format so as to use this information to take managerial decisions and to ensure the smooth running of the business. In a business, there is a need to keep a record of multiple things such as expenses, amount receivable and payable, tax submission, stock maintenance and so on. The recording of all these entries or managing all such issues is jointly termed as business accounting.

One of the major purpose of accounting is to provide data needed for decision-making and efficient operation of business. For example, the owners, who provide capital for the business, are interested in interest yielded on the capital and the financial stability of the business. This can be done only by maintaining accounts of the company. Similarly, accounting also serves creditors purpose by displaying a fair view of assets and liabilities of the company. In addition, government relies on accounting for assessing the taxable capacity of the business. Thus, accounting is an inevitable part of a business.