Accounting is a system to manage transactions.

I’d call it an uber system to organise money that you’re owed, money that you owe and the things that you own. I believe the outcome of accounting is to get information that will help you make better decisions about your business and life. Also, the Corporations Act does require you to keep records and accounting is the system to manage financial records.

But like all systems, it is man-made and not free from flaws. There are standards on how to deal with a lot of transactions, but at the same time, there are certain situations where the treatment of a transaction is ‘grey’ and unclear.