For this task am going to explain the purpose of accounting in a business organisation.

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Nassima Bouchelkia             BND Business year1           ID NO, 317357                     tutor, M Hamilton    

Unit 5, introduction to accounting



For this task am going to explain the purpose of accounting in a business organisation.


Accounting is a process of identifying the business financial information, it also relates to keeping all financial records and transactions that relates to an organisation. It also known as measuring and interpreting the business economic information. Accounting used to indentify and represent the information to the internal users such as employees and management and external users such as the government and investors.

The purpose of accounting,

The purpose of accounting to an organisation is that it provides financial statements for the internal and external users which are used for different purposes such as making decisions. Accounting also used as guide to monitor the business income and expenditure. Additionally is also used to manage cash flow forecast that indicates to the business their current financial situation which will help that business to plan for the future

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Accounting comprises from two stages which are,

Financial accounting, it relates to recording day t day transactions by using double entry bookkeeping. The financial accounting makes the entries in an account which know as ledger account. This account consists from two locations which are the debits are the people that the business owes them money, and the creditors are the people which the money is owed to. For example, assets will increase debts and will decrease credit and liabilities will decrease debits and will increase credit and capital.

The reason why there are two locations ...

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