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Traits of Accounting

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Traits of Accounting

Recording

Transactions of financial character are recorded right after they appear in the books of accounts i.e. either in Journal or in subsidiary books for example cash book, sales book, purchase book, and so on.

Classifying

It suggests all the transactions are categorized into various groups which include personal, real and nominal and so on. To put it differently it signifies the classification of the information registered in the journal or in any subsidiary books into appropriate accounts in the ledger.

Summarizing

It usually means summarizing the results and consequences of the business transactions.

As an example; a Trial Balance is prepared after getting the balances from various ledgers.

Trading along with profit and loss account is prepared to be aware of the profit or loss of the business for a specified time period and also to find out the financial situation of the business over a particular time.

Analysis

It is a complex approach which in turn measures the financial progress of the company. The primary objective of financial analysis is to identify the strengths and weakness of business through making comparison of different components.

Analysis is generally ineffective without the need of interpretation and interpretation gets complicated without analysis.

Interpretation

Interpretations as well as analysis are complementary to one another. Interpretation requires analysis, where analysis is unproductive without interpretations.

It is a broader term includes criticism, assessment of facts, analysis, comparison and others.

Concept & Definition of Accounting ?
Characteristics of Accounting ?
Key Differences Between Accounting & Finance ?
basis of accounting: Cash Basis & Accrual Basis ?

Fundamental Financial Accounting Assumptions, Principles & Conventions

Core Steps in Accounting Cycle | During & End of Accounting Period

4 Financial Statements | Balance Sheet | Retained Earnings | Cash Flows

The Balanced Scorecard | Comprehensive Knowledge | Measures | Perspectives

Capital Budgeting | Definitions | Features | Process | FIVE Stages

Capital Budgeting Decisions | Criteria | Substitute Directions | Implications

Liquidity Ratios | Current Ratio | Working Capital Ratio | Quick Ratio

Asset Turnover Ratios | Receivables Turnover | Inventory Turnover | Total Asset Turnover | Fixed Asset Turnover

Financial Leverage Ratios | Debt | Total Assets | Equity | Times Interest Earned

Profitability Ratios | Gross Profit Margin | Return On Assets | Return On Equity

Dividend Policy Ratios | Dividend Yield | Payout Ratio | Key Procedural Aspects