What is Accounting

Accounting is the comprehensive and systematic recording of the financial transactions. It assists in planning and controlling finances, and making financial decisions. The major products of personal financial management and accounting procedures are cash flow statement, income statement, and balance sheet. Software products can be used to organize financial information and make financial decisions.

Running head: WHAT IS ACCOUNTING
What is accounting
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1WHAT IS ACCOUNTING
Answer (a)
Accounting is the comprehensive and systematic recording of the financial transactions.
Personal finance is the term that manages the savings, investing and money. It includes banking,
budgeting, insurance, mortgages, retirement planning, tax, estate planning and investment. In
context of personal finances, recording of the financial transactions enables an individual to
know where actually they stand in financial term. Further, it offers clear view regarding what is
owned, owed and what can be expected to be received in future (McGuigan, 2015). Accounting
further assists in planning as well as controlling the finances through developing the forecasts
and budgets. Variance analysis can provide the mechanism for monitoring the expenses incurred
by the organizations through comparing the actual results with the budgeted forecasts.
Accounting also assists the individual to make financial decisions regarding investment and
expenses. Further, accountants can assist the individual in all aspects of financial issues and
provide with the expert advices (McGuigan, 2015).
Answer (b)
3 major products of personal financial managements and accounting procedures are cash
flow statement, income statement and balance sheet. Income statement represents the income
received by the individual and expenses made from those for living the life. After the calculation
that is deducting the expenses made for living life from the income generated, the resulted
balance or deficit can help to make further decisions related to spending or investment
(Apostolou et al., 2015). Balance sheet represents what is owed and what is owned by the
individual. The balance sheet is the screenshot of the financial standing rather than the progress
report. Further, it helps in moving the assets, liabilities or borrowings and equity. Further, the

2WHAT IS ACCOUNTING
cash flow statement represents the summary of cash earned by the individual and expensed by
him/her. Further, in the cash flow statement the source from where the cash is generated and the
source where the cash is expensed are reported. It is the picture that shows the liquidity and
assists the way in which it is created and in what areas there us a scope to increase the cash
(Apostolou et al., 2015).
Answer (c)
Number of software products can be used those help in organizing the financial
information and using it to make financial decisions. These software are designed in making
record keeping aspects for personal finance including classification, collection, and sorting the
financial data. It helps in decision making through following – (i) collecting data – most of the
programs are designed the data input for looking like checkbook which is used by most of the
people for maintain record related to personal finance (Madsen, 2014) (ii) reporting results and
thereby planning ahead – all the software for personal finance produces the required summary
reports including cash flow statement, income statement and balance sheet that shows the
financial activity (iii) security, cost and benefit – all the programs are designed for installing on
personal computer r handheld devices like PDA (Personal Digital Assistant) or the smart phone.
Further, the service and provides generally provides appropriate level of security
(Narayanaswamy, 2017).

3WHAT IS ACCOUNTING
Reference
Apostolou, B., Dorminey, J. W., Hassell, J. M., & Rebele, J. E. (2015). Accounting education
literature review (2013–2014). Journal of Accounting Education, 33(2), 69-127.
Madsen, P. E. (2014). Has the quality of accounting education declined?. The Accounting
Review, 90(3), 1115-1147.
McGuigan, N. (2015). The impact of journal rankings on Australasian accounting education
scholarship–A personal view. Accounting Education, 24(3), 187-207.
Narayanaswamy, R. (2017). Financial accounting: a managerial perspective. PHI Learning Pvt.
Ltd..