Question

explain the purpose and use of the different accounting records

Answer 1

Accounting record is defined as the all of the documentations involved in the preparation of financial statements and records which are relevant to financial review and audits which include recording of assets and liabilities, ledgers, journals and any other supporting documents like invoices.

Ledger - mantaining ledger is a must in all the accounting systems. Ledger is used for preparing trial balance which checks the arithmetical accuracy of the accounting books. Ledger is the store-house of all kind of information qhich is used for preparing final accounts and financial statements.

Prime entry books - the another one is prime entry books which are also known as books of original entry are books where transactions are first recorded. The main books of prime entry consists of sales day book, purchase day book, sales and purchase returns day book, general journal and cash book.

Accounting plays important role by developing info by providing answers to many questions faced by the users of accounting information. It provides information how good or bad the financial condition of business is, which activities or products have been profitable.

Accounting is important for a business entity due to following reasons:-

1. Accounting record, set on the base of even practices, will assist a business to compare results of one period with another period.

2. Insulation records, backed up by proper and genuine vouchers are good evidence in court of law.

3. Increased volume of business results in large number of transactions and no businessman can remember everything. Accounting records avoid the necessity of remembering various transactions.