A businessman wants to know how much profit or loss he has made during an accounting year.For this purpose accounts are prepared so that the businessman can know his assets , his income, expenses etc. There are various steps in accounting . Firstly, financial transactions are recorded in the journal proper. After that the posting is done in the ledger and various subsidiary books. Then the balances shown by various ledger accounts are used for the preparation of trial balance. Once the trial balance is made it becomes easy to form the financial statements.
Financial statements consist of two parts one is the Income statement and the other is the Position statement. Income statement shows the gross and net profit and loss of a year. And the position statement shows the final position of all the assets and liabilities.
In this way the main objective of a business accounting is to measure and record the profitability and financial status of a business.
Harsha Lal ACW – Accounts