Accounting is the process of recording, classifying, and summarizing financial transactions to provide information that is useful in making business decisions. Bookkeeping is the process of recording the financial transactions of a business. It is a necessary part of accounting, and involves the recording of financial transactions in a company’s accounting records.

There are several key principles that underlie the practice of accounting and bookkeeping, including the following:

1. Double-entry accounting: This involves recording each financial transaction in at least two different accounts, with one account being credited and the other being debited. This helps to ensure the accuracy and completeness of the financial records.

2. The accrual basis of accounting: This involves recording financial transactions when they occur, rather than when cash is received or paid. This helps to provide a more accurate picture of a company’s financial position.

3. The matching principle: This involves matching revenues and expenses to the accounting period in which they are earned or incurred. This helps to provide a more accurate picture of a company’s financial performance.

4. The going concern assumption: This assumption states that a business will continue to operate indefinitely, unless there is evidence to the contrary. This allows businesses to record their assets and liabilities at their current values, rather than at their liquidation values.

Bookkeeping and accounting are essential functions for any business, as they help to provide financial information that is necessary for decision making, planning, and control.

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