Individuals who record transactions are called accountants. There are many educational levels for accountants such as CA, ACCA, ACA, FCMA etc. Auditing is a relevant term in which financial statements of an organization are examined by an independent auditor. Modern accounting system is double entry book keeping system. In this accounting system two entries of each transaction are recorded. One entry is in debit account and the other is in credit account. The sum of all debit entries is equal to the sum of all credit entries. It is also a way of checking errors in your transaction.

In accounting records of all transactions are kept. All the sales, purchase, income, loss, profit and depreciation of machinery are calculated. This is very important for decision making of managers. They can forecast future predictions on the basis of this record keeping. It is a useful way in which a business tracks its income and expenses.

Individuals need to know some basic information about accountancy to understand the accounting system in detail. There are three basic things to know in accountancy including journal, general ledger and subsidiary ledgers. All these statements provide important and valuable information to the owner of the business.

Each transaction entry is recorded in a journal. There are various types of journals having particular types of entries. After entering transactions in journal they are posted to the general ledger. In general ledger, financial data is managed in three categories including Assets, Liabilities and Capital. An accountant can obtain a financial report from general ledger. In subsidiary ledger more specific information is recorded which is not obtained in general ledger. It includes the name and balance of the customer.

It is necessary to know debit and credit to understand the accounting system. Every transaction affects two accounts. Debits are recorded on the left side and credits are recorded on right side. Assets are debits and liabilities are credits. Similarly costs and expenses are debits, income is credit. Both sides should be equal in the financial statement. All the financial statements are based on this basic concept of debit and credit. There are many types of financial statements which are used for different purposes in organizations.

In accounting, forms and reports are prepared for financial and taxation purposes. It has become a separate department in every organization. The presence of accounting department or accountant is necessary in any small or large organization. Many accountancy courses are offered by different colleges and universities to fulfill the needs of accountants. In past demands of accountants were limited but know it has become a respectable profession for individuals. Accountants are getting high salaries all over the world.

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