Accounting:
The Basic equation of Accounting is Asset = Liability + Owner's Equity. Asset's nature account Debit while Liability/Owner's Equity's Natural Account is Credit. Simply put, Debit simply means Left and Credit simply means right. Whenever there is a Debit transaction, there must be a credit transaction one one other accounts. There are different types of accounting, Financial and managerial. Financial accounting focuses on compliance with Generally Accepted Accounting Principles and are required to answer to external auditors. Managerial Accounting, on the other hand, does not follow the Generally Accepted Accounting Principles and instead, it focuses on Operations, and forecasts of a firm in general, and they only have to answer to internal auditors. Accounting is important because it is not only provide an objective review of a company's performance its external users (E.g. investors), it is also used by managers to determine how should they improve their company. Accounting records, however, can also be misstated intentionally or intentionally which can significantly impair an external user or management's judgement of a company. Enron Corp., is an example of using manipulated number or creative accounting methods to cover up liabilities. Hence, Auditing is extremely important.
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