The various steps involved in accounting process are:
(i) Identifying the transactions and journaiising: The first step in the accounting process is identifying the financial transactions of a business. All the monetary transactions are recorded in the books of original entry called journals. Recording the transactions in the journal is called journalising. Entries are made journals.
(ii) Posting and balancing: Transferring the entries from the journal to the ledger is called posting. In ledger, entries are made in each account after classifying them under common heads. Finding out the difference between the total of the debit column and credit column of all the ledger accounts is called balancing.
(iii) Preparation of trial balance: The list of ledger balances namely trial balance is prepared as the next step. On the basis of ledger balances the financial statements are prepared.
(iv) Preparation of trading account: Next step is preparation of trading account for a particular accounting period. All the direct revenues and direct expenses are transferred to trading account. The balance in the trading account is the gross profit or gross loss.
(v) Preparation of profit and loss account: Profit and loss account is prepared next for a particular accounting period. All the indirect revenues. and indirect expenses along with gross profit or gross loss are transferred to profit and loss account. The balance in the profit and loss account is the net profit or net loss.
(vi) Preparation of balance sheet: A statement showing the balances of assets and liabilities namely balance sheet is prepared as the final step in the accounting process. It is prepared on a particular date, normally, on the last day of the accounting period.

The external users of accounting are:
(i) Creditors and financial institutions: Suppliers of goods and services, commercial banks, public deposit holders and debenture holders are included in this category. They are interested in knowing the liquidity position and repaying capacity of the business enterprise.
(ii) Investors: Persons who are interested in investing their funds in an organisation should know about the financial condition of a business unit while making their investment decisions.
(iii) Customers: Customers who buy and use the products and services of business enterprises are interested in knowing the details of the products and the prices charged to them.
(iv) Tax authorities and other regulatory bodies: Accounting information helps the tax authorities in computing income tax and taxes on goods and services and other taxes to be collected from business units. Other regulatory bodies also require information about revenues, expenses and other financial aspects of business to ensure that the enterprises comply with statutory requirements.
(v) Government: The scarce resources of the country are used by business enterprises. Information about performance of business units in, different industries helps the government in policy formulation for development of trade and industry, allocation of scarce resources, grant of subsidy, etc., Government also administers prices of certain commodities. In such cases, government agencies have to ensure that the guidelines for pricing are followed.
(vi) Researchers: Researchers to carry out their research can use accounting information and make use of the published financial statements, for analysis and evaluation.
(vii) General public: From accounting information, the general public at large can get a view of the earning capacity and stability of the enterprise as well as the social responsibility measures undertaken by the enterprise, particularly in its area of operation and also the employment opportunities provided to the local people.

(a) Purchases: Buying of goods with the intention of resale is called purchase.
(b) Sales: When goods meant for resale are sold, it is called sales.