What is Accounting

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