The first step to learn about accounting is understanding the process of recording financial information. This process is called bookkeeping and it is a part of what accountants do. To be able to interpret financial information, one must learn the basic vocabulary, concepts, and procedures. After that comes learning about ratio analysis, which is the relationship of one accounting number to another, and is used to examine a firm’s competitive position. The individual accounting numbers themselves are only the starting point.
Account—The Basic Unit of Storage
All organizations maintain a set of accounts (the basic unit of storage) of everything the organization wants to keep track of. Within an organization, this ...
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