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4 FUNCTIONS OF ACCOUNTING
1. Recording is the way an accountant records all
the transactions that have been made within the
firm. This is important because the next steps
will rely on this first step. Without all the records,
we will not be able to summarize.
2. Summarizing- the accountants divide all the data
that have been gathered into different
categories. So that it will be clearly understood
by the reader and it will not be bombarded with
data which are not significant to the
organization.
3. Reporting- As the owner of the company, they
have the rights to know about the different
operations happening inside their company.
Also, they are given reports by the accountants
quarterly and annually so that they will be kept
updated.
4. Analyzing- the accountants give a better
understanding about all the gathered and
owners. It also refers to the statement of
financial position.
● PL Statement or the Profit and Loss Statement
refers to the income statement. This is a financial
report which comes up with a summary of a
company’s revenues, expenses, and
profits/losses over a given period of time.
● Personal Drawing are the withdrawals of a sole
proprietorship's business assets by the owner for
the owner's personal use.
● Income refers to money (or some equivalent
value) that a business or anybody receives,
usually in trade for providing a good or service or
through investing capital.
● Expenses are the value of operations that a
company induces to generate revenue. These
can be the payments given to the suppliers or
factory leases.
● Capital refers to financial assets, such as funds
held in deposit accounts and funds acquired
from special financing sources. It can be
