Principles of Financial Accounting,

Accounting may be defined as the process of analyzing; classifying; recording; summarizing; and interpreting business transactions. One of the key aspects of the process is keeping “running totals” of “things.” Examples of items a business might keep track of include the amount of cash the business currently has; what a company has paid for utilities for the month; the amount of money it owes; its income for the entire year; and the total cost of all the equipment it has purchased. You want to always have these running totals up to date so they are readily available to you when you need the information.