What is accounting
Accounting is the process of recording, classifying, and summarizing financial transactions to provide information that is useful in making business decisions. The purpose of accounting is to provide financial information that will be used by management in making decisions about the allocation of resources.
The main types of financial statements used in accounting are the balance sheet, income statement, cash flow statement, and statement of changes in equity. The balance sheet shows the financial position of a company at a specific point in time, while the income statement shows the profitability of a company over a period of time. The cash flow statement shows how cash is generated and used by a company, and the statement of changes in equity shows the owners’ equity in a company.
Merriam Webster Online
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
- 2 a: work done in accounting or by accountants
b: an instance of applied accounting or of the settling or presenting of accounts
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the “language of business”, measures the results of an organization’s economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators. Practitioners of accounting are known as accountants. The terms “accounting” and “financial reporting” are often used as synonyms.