Accounting process is a series of activities which is followed by a business firm to record the financial transactions of a business. These steps are as follows:-
- Identification:- Collecting and identifying the business transactions from various sources is the first step in the accounting process.
- Measurement:- Only those transactions are taken into consideration, which has certain monetary value.
- Recording:- Only those transactions are recorded which can be measured in terms of money. It involves recording them in Journal proper and keeping systematic records of all of them.
- Summarizing:- It involves the process of posting the balances of all the accounts at one place i.e. Trial balance.
- Communicating:- And finally the financial statements are communicated to the users who analyze them as per their individual needs.