What Is 'Accounting': Definition of

accounting
Practice and body of knowledge concerned primarily with

methods for recording transactions,
keeping financial records,
performing internal audits,
reporting and analyzing financial information to the management, and
advising on taxation matters.
It is a systematic process of identifying, recording, measuring, classifying, verifying,
summarizing, interpreting and communicating financial information. It reveals profit or
loss for a given period, and the value and nature of a firm's assets, liabilities and owners'
equity.
Accounting provides information on the
resources available to a firm,

the means employed to finance those resources, and
the results achieved through their use.
What is 'Accounting'
Accounting is the systematic and comprehensive recording of financial transactions
pertaining to a business, and it also refers to the process of summarizing, analyzing
and reporting these transactions to oversight agencies and tax collection entities.
Accounting is one of the key functions for almost any business; it may be handled by
a bookkeeper and accountant at small firms or by sizable finance departments with
dozens of employees at large companies.
Definition of ACCOUNTING
1:the system of recording and summarizing business and financial
transactions and analyzing, verifying, and reporting the
results; also :the principles and procedures of this system
 studied accounting as a freshman
2a :work done in accounting or by accountants
b :an instance of applied accounting or of the settling or presenting
of accounts
3: ACCOUNT 2
 They were required to provide a detailed accounting of their actions.
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Accounting
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WHAT IT IS:
Accounting is the process of systematically recording, measuring, and
communicating information about financial transactions.
HOW IT WORKS (EXAMPLE):

At the heart of accounting is the double-entry bookkeeping method. This involves
making at least two recording entries for every transaction: a debit in one account
and a credit in another account. The method helps prevent errors because the sum
of the debits should equal the sum of the credits. The three major financial
statements produced by accounting are the income statement, the balance sheet,
and the cash flow statement.
Accounting can be done on a cash basis (cash accounting) or on an accrual basis

(accrual accounting). Cash accounting records cash inflows and outflows in the
period in which they occur. Accrual accounting records income and expenses in the
period to which they are attributable rather than when cash payments come and go.
For example, a check written in April for March's utilities would appear as a March
expense under the accrual method and as an April expense under the cash method.
There are two general kinds of accounting. Financial accounting is the recording and
communication of economic information in accordance with Generally Accepted
Accounting Principles (GAAP) and is primarily for external users. Managerial
accounting is the recording and communication of economic information that may or
may not be in accordance with GAAP and is for internal users. Other accounting
specialty areas exist, such as tax accounting, oil and gas accounting, or forensic
accounting.
There are two kinds of users of accounting information: internal users and external
users. Internal users are usually company managers who use accounting information
to decide how to plan and control operations on a daily and long-term basis. External
users are existing or potential investors, creditors, analysts, financial advisers,
regulatory authorities, unions, and the general public. They use accounting
information to make a myriad of decisions about whether to buy, hold, sell, lend,
continue a relationship, or make an agreement.
The Financial Accounting Standards Board (FASB), the Securities and

Exchange Commission (SEC), the IRS, and other regulatory bodies set accounting
standards and requirements for accounting frequency and presentation.
WHY IT MATTERS:
Accounting is tremendously important because it is
the language of business, and it is at the root of
making informed business decisions. Without
accounting, managers would not know which
products were successful, which business
decisions were the right ones, and whether the
company was earning money. It would not know
how much to pay in taxes, whether to lease or buy an asset, or whether to merge
with another company. In short, accounting doesn't just count the beans, it measures
a company's success at meeting its goals and it helps investors understand how
efficiently their economic resources are being used. This is why companies must be
proficient in accounting in order to make good decisions.
Accounting can be controversial, in that accounting rules and methods are

sometimes subject to interpretation or can appear to distort a company's true
performance. This is another important reason that effective leaders and managers
must thoroughly understand the accounting impact of their decisions.
Accounting
Accounting or accountancy is the measurement, processing, and communication of financial
information about economic entities[1][2] such as businesses and corporations. The modern field
was established by the Italianmathematician Luca Pacioli in 1494.[3] Accounting, which has been
called the "language of business",[4] measures the results of an organization's economic activities
and conveys this information to a variety of users, including investors, creditors, management,
and regulators.[5] Practitioners of accounting are known as accountants. The terms "accounting"
and "financial reporting" are often used as synonyms.
Accounting can be divided into several fields including financial accounting, management
accounting, external auditing, tax accounting and cost accounting.[6] Accounting information
systems are designed to support accounting functions and related activities. Financial accounting
focuses on the reporting of an organization's financial information, including the preparation
of financial statements, to external users of the information, such
as investors, regulators and suppliers;[7] and management accounting focuses on the
measurement, analysis and reporting of information for internal use by management.[1][7] The
recording of financial transactions, so that summaries of the financials may be presented in
financial reports, is known as bookkeeping, of which double-entry bookkeeping is the most
common system.[8]
Accounting is facilitated by accounting organizations such as standard-setters, accounting
firms and professional bodies. Financial statements are usually audited by accounting
firms,[9] and are prepared in accordance with generally accepted accounting
principles (GAAP).[7] GAAP is set by various standard-setting organizations such as the Financial
Accounting Standards Board (FASB) in the United States[1] and the Financial Reporting Council
in the United Kingdom. As of 2012, "all major economies" have plans to converge towards or
adopt the International Financial Reporting Standards (IFRS).[10]
accounting
[uh-koun-ting]
Spell Syllables
 Synonyms
 Examples
 Word Origin
See more synonyms on Thesaurus.com
noun
1.
the theory and system of setting up, maintaining, and auditing thebooks of a
firm; art of analyzing the financial position and operatingresults of a business
house from a study of its sales, purchases,overhead, etc. (distinguished fro
m bookkeeping ).
2.
a detailed report of the financial state or transactions of a person orentity:
an accounting of the estate.
3.
the rendering or submission of such a repo
accounting
1. the principles or practice of systematically recording, presenting, and interpreting financial
accounts
2. a statement of debits and credits
3. a settling or balancing of accounts

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accounting

Practice and body of knowledge concerned primarily with

Accounting provides information on the

resources available to a firm,

HOW IT WORKS (EXAMPLE):

Accounting can be done on a cash basis (cash accounting) or on an accrual basis

The Financial Accounting Standards Board (FASB), the Securities and

Accounting can be controversial, in that accounting rules and methods are

a detailed report of the financial state or transactions of a person orentity:

an accounting of the estate.

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