Accounting

What is Accounting?

Accounting is the process of recording, classifying, summarizing, and interpreting financial transactions and events for an individual or organization. The primary purpose of accounting is to provide financial information that helps stakeholders—such as management, investors, regulators, and others—make informed decisions.

Recording: Tracking every financial transaction, such as sales, purchases, and payments, using journals and ledgers.
Summarizing: Preparing financial statements, like the balance sheet, income statement, and cash flow statement, that reflect the organization’s financial performance and position.

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Individual

For an Individual, accounting involves tracking personal income, expenses, and investments. It also includes filing tax returns and managing personal finances in accordance with tax laws.

HUF

In HUF accounting, income and expenses of the family business are recorded separately. The HUF must maintain accounts for its assets, liabilities, and income for tax purposes, with the Karta managing the finances.

Partnership firm

For a Partnership Firm, accounting includes maintaining books to track the firm’s income, expenses, and profits. Profits and losses are shared as per the partnership agreement, and tax is calculated accordingly.

LLP

LLP accounting involves maintaining financial records of income, expenses, and profit-sharing between partners. Since LLPs are separate legal entities, they must file annual financial statements and comply with tax regulations.

Private & Public limited

For a Private Limited Company, accounting includes maintaining comprehensive financial records, preparing balance sheets, and filing taxes. Public Limited Company accounting is more complex, requiring regular financial reporting, auditing, and compliance.

Trust, NGO

For a Trust or NGO, accounting focuses on tracking donations, grants, and expenditures related to the trust’s or NGO’s charitable activities. Proper records are essential for regulatory compliance and transparency in fund management.