Important Note: The text in this chapter is intended to clarify
business-related concepts. It is not intended nor can it replace
formal legal advice. Before taking any actions relating to your
business, always consult your accountant or a business law/tax
The Need for Accounting
Every organization needs to maintain good records to track how
much money they have, where it came from, and how they spend it.
These records are maintained by using an accounting system.
Accounting for Windows
These records are essential because they can answer such important
• Am I making or losing money from my business?
• How much am I worth?
•	 Should I put more money in my business or sell it and go into
• How much is owed to me, and how much do I owe?
• How can I change the way I operate to make more profit?
Even if you do not own or run a business, as an accountant you will
be asked to provide the valuable information needed to assist
management in the decision making process. In addition, these
records are invaluable for filing your organization’s tax returns.
The modern method of accounting is based on the system created by
an Italian monk Fra Luca Pacioli. He developed this system over
500 years ago. This great and scientific system was so well designed
that even modern accounting principles are based on it.
In the past, many businesses maintained their records manually in
books – hence the term “bookkeeping” came about. This method of
keeping manual records was cumbersome, slow, and prone to human
errors of translation.
A faster, more organized, and easier method of maintaining books is
using Computerized Accounting Programs. With the decrease in the
price of computers and accounting programs, this method of keeping
books has become very popular.
Accounting and Business
Accounting is the system a company uses to measure its financial
performance by noting and classifying all the tran