Accounting is the process of recording, summarizing, analyzing, and reporting financial transactions of a business or organization. It involves maintaining financial records, preparing financial statements, and interpreting financial information to aid in decision-making.Transaction:A transaction is an event that involves the transfer of something of value between two or more parties. In accounting, transactions are typically monetary in nature, but they can also involve the exchange of goods, services, or other resources. Every transaction has at least two aspects: what is given and what is received. For example, when a company sells a product, it gives the product to the customer and receives payment in return.Accounting Equation:The accounting equation, also known as the balance sheet equation, is a fundamental principle of accounting that represents the relationship between a company's assets, liabilities, and equity. The equation is expressed as:Assets = Liabilities + Equity- Assets: These are resources owned by the company that have economic value and can be used to generate future benefits. Examples include cash, inventory, equipment, and accounts receivable.- Liabilities: These are obligations or debts that the company owes to external parties. Liabilities represent claims against the company's assets. Examples include accounts payable, loans payable, and accrued expenses.- Equity: Equity represents the owner's claim on the company's assets after all liabilities have been settled. It is often referred to as shareholders' equity in a corporation and owner's equity in a sole proprietorship or partnership. Equity includes contributions by the owners (capital) and retained earnings (profits reinvested in the business).The accounting equation must always balance, meaning that the total value of assets must equal the total value of liabilities plus equity. This principle forms the basis for double-entry bookkeeping, where every transaction affects at least two accounts, ensuring that the equation remains balanced.