Four stages of accounting

Classifying

sorting out accounting data into orderly and meaningful categories. Example:  receipts, payment, purchases, sales etc.

Recording

transactions are recorded in the books of the business. Example: journals and ledgers

Summarising

periodically accounting data are summarised in the form of financial statement. Example: Trading and Profit and Loss Account and Balance Sheet.

Interpreting

the financial statements are analysed and the result of the analysis is used as a guide to make decisions.