Explain the meaning of the term accounting and give its usefulness in society.    (6marks)

Accounting is a term that refers to the process of recording, summarizing, analyzing, and reporting financial transactions of a business. It is often referred to as the "language of business" because it communicates the financial condition and performance of a business to interested users.

Step 1: Recording - This involves the systematic and comprehensive recording of financial transactions pertaining to a business. This is also known as bookkeeping.

Step 2: Summarizing - This involves the preparation of financial statements which include the balance sheet, income statement, and cash flow statement.

Step 3: Analyzing - This involves the detailed examination of the financial statements in order to derive meaningful insights about a business.

Step 4: Reporting - This involves the preparation and presentation of the financial reports for the users like the shareholders, creditors, and regulators.

Accounting is useful in society in several ways:

1. It helps in making economic decisions: By providing financial information about a business, accounting helps investors, creditors, and management to make economic decisions.

2. It aids in the efficient use of resources: Accounting provides information about the resources available to a business, the means employed to finance those resources, and the results achieved through their use.

3. It helps in measuring performance: By keeping a systematic record of financial transactions, accounting helps in measuring the performance of a business.

4. It enhances accountability: Accounting ensures accountability by keeping a check on the inflow and outflow of resources.

5. It facilitates financial management: Accounting helps in planning and controlling the financial resources of a business.

6. It aids in compliance with legal requirements: Accounting helps a business to comply with the tax laws and other statutory regulations.