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Accounting is the practice of recording financial transactions and maintaining such records as guide for financial reports, statements and tax returns. Accounting is basic to every business and is indispensable in such case. Proper accounting makes it possible for smooth monitoring and sound financial decisions. It does not only boost efficiency but also saves important resources of the business.Arrival of AccountingThe technique of Accounting dates back thousands of years ago. Traditional accounting methods aids in keeping records of the growth of crops and herds. Early practice of accounting mainly served to assist the memory of a trader or businessman who personally keeps a record of his transactions.In the modern times, accounting is essential for any business to succeed in such a way that the success rate of a small business is directly proportional to the accuracy of its financial accounting. Precise accounting guarantees accurate financial decisions.Advantages of AccountingIn summary here are the advantages of an proficient accounting:- facilitates sound financial decisions from the top management- grants access to the financial status of the business by providing foresight...more
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One analogy is fixed costs + variable costs = total costs similar to debt + equity = assetsThis analogy is partly motivated because (for a given amount of debt), debt servicing is a fixed cost. This leads to two measures of operating leverage:Master...more