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Definition of Accounting given by American Accounting Association (AAA):
Accounting is the process of identifying, measuring and communicating economic information to permit informed judgments and decision by users of the information.
In simple words, Accounting Analysis refers to the evaluation of company’s actual economic position for a particular time period.
Need of Accounting Analysis
A) If anyone simply wants to know about the need then, it can be said that whether all the figures entered into the books of accounts are correct.
B) Accounting Analysis is done in order to assess the profitability position, stability position, liquidity position, feasibility in nature, solvency position of the firm for a particular period of time.
C) All these informational factors are analyzed by the professional of accounting field and use this information for preparing reports of the company for a specific span of time.
D) This kind of analysis is also known as financial analysis, so from this analysis, experts can do the comparison by taking last year’s figures and current year’s figures into consideration.
How is Accounting Analysis done?
The process of accounting analysis or the steps involved are given below:
a) Firstly identify all the policies of accounting then, assess them correctly.
b) Now, check the limit up to which it can be flexible in nature.
c) Ascertain the strategy report of the data.
d) Locate the negative facts about the report and do the analysis of the same.
e) Not only the above steps but in addition to it, in order to fulfill the aim of efficient analyzing the reports, experts must locate and determine the problems which are important to be adjusted.
Accounting Analysis Homework Help New York
Conclusion: Accounting Analysis is having a vital role in the field of the accounting department of the firm, as it enables the experts to locate the disorders or human fraudulent done, or any kind of adjustments necessary to be made.