Accounting is often referred to as the language of business. The primary aim of a language is to serve as a means of communication. Accounting is used to communicate financial and other information to people, organizations, Governments etc., about various aspects of business and non-business entities.

Accounting designed for outsiders (persons other than owners and managers) is known as financial accounting. It is concerned with the recording of business transactions and periodic preparation of balance sheets and income statement from such records. In this manner, the financial accounting is useful for the ascertaining profit or loss made during a given period and financial position at the end of the period.

 

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