Golden Rules of Accounting
The accounting process involves recording, classifying, and summarizing the financial transactions of a business or organization. Basically, accounting refers to a process where financial transactions are recorded systematically to keep a chronological record of what happened at each stage.
The financial information of every economic entity must be presented to all stakeholders. To provide a true picture of the entity, the financials must be accurate. Each of its transactions must be included in this presentation. The purpose of accounting is to understand financial status of economic entities by comparing them. In order to ensure uniformity and to account for transactions correctly, there are three Golden Rules of Accounting. Accounting and bookkeeping are based on these rules. Journal entries are the basis of this.