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All recorded transactions, which are of the same type and nature, are grouped under one head. Cash sales, credit sales and sales to owner, etc., are grouped as total sales. Cash purchases, credit purchases etc., are classified as total purchases…
Business profits and financial position. These are known as financial statements or profit and loss account and Balance sheet.With the help of analysis, useful information is obtained form financial statements. The users of the information then interpret the information derived. Such interpretation helps interested parties in taking prompt decisions. The whole process of recording, classifying, summarizing and interpreting is known as accounting. The art of recording, classifying, summarizing, analysing and interpreting the business transactions systematically and communicating business results to the interested users. These interested users may be owner himself of herself, creditors government, etc.; accounting is also viewed as discipline. It has its own principles, rules and concepts, which guide accountants in their accounting practices.The meaning of the word consistency is continuity in methods or practices. In accounting context, consistency means followers using the same accounting methods or practice year after year. You can also say that the methods followed for making accounting information is not altered generally during its life. A businessman fro example, follows the following practices or methods generally year after year:Machines and other fixed assets used in a business slowly decline in value over time. ...
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