Accounting is concerned with the record of transactions and events. This helps in control over property and assets and also towards periodical preparation of statements to communicate the results of operations and the financial position to all concerned.
It is important to note that accounting is relevant not only to businesses which earn profits but also to institutions which may, by their constitution, be non-profit.
Historical Background
The features described here-in-above continue to hold. The accounting records are supposed to reveal following to all concerned : (a) what the organisation possesses; (b) how much others owe to it; (c) how much it owes to others; (d) what is the amount belonging to the proprietors; and (e) what is the extent of funds under suspense and/or relevantly attributable to several periods of activity.
By such records, it should be possible to develop, at stipulated dates, statements of revenue earned under different significant heads, expenses and costs incurred in this connection, losses in the process, and the net result - as a profit or a loss. This statement is generally called as "Income Statement" or "Profit and Loss Account (P&LA)". It is accompanied by the statement on the financial position - called the "Balance Sheet (BS)".
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