Accounting

An account can be said to be a record that is used in increasing and decreasing assets, liability and equity. It is used to analyze the effects of the transactions on the basis of the accounting equation. The recording process in accounting involves three major steps which are used to keep track on all transactions and data (Weygandt, 2010). This makes it easy to have a clear view and update of all the activities in the accounting period. This information is later combined to form financial statements. The major steps include the account which consists of debits and credits as well as equity. The recording process includes steps like the journal which should be detailed in order to be explainable and understandable, posting, ledger should contain all assets, and accounts charts. In order to ensure that the data entered in the account it correct there is a trial balance and locating errors (Weygandt, 2010).

The idea of credits and debits can be confusing this is because the concept has a clearly different meaning as they have no relationship meaning with other terms. There are also items of double entry in the bookkeeping system which tends to be confusing (Weygandt, 2010). The accounting equation of assets= liabilities + the owners Equity can be rearranged in different forms which might as well be confusing (Weygandt, 2010). There is also a confusing element of different treatments of transactions of the same class, for instance, a bank account differs in its entry from the owner’s perspective to that of the bank. It is true to say that accounting requires determination in order to know the bookkeeping process to ensure that the financial statements produced are a true and a fair reflection of a business.

 

 

 

Reference

Weygandt, J. J. (2010). Accounting principles: Vol. 1. Hoboken, N.J: Wiley.