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The cash owned is known as an asset and what the organization owes is known as liability. It may be summarized that in a balance

The cash owned is known as an asset and what the organization owes is known as liability. It may be summarized that in a balance sheet, assets always equal liability, and therefore, a balance sheet balances. It may be noted that the accounts aggregate only transactions which change what we own and what we owe under different categories. Thus, Pacioli's great invention has enabled the easy emergence of the balance sheet at the end of a series of transactions. This method is also used by modern computers to aggregate the consequences of a series of discrete transactions. We have also found that the cost of production is also a byproduct of the process In the previous section we discussed how Pacioli's double-entry bookkeeping is the fountainhead of all accounting. Let us now understand that part of accounting which is labelled as financial accounting. The most important output of the system of financial accounting is the balance sheet and profit and loss account to be made available to the stakeholders, the main ones being the owners and shareholders.

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