Accounting: Difference between revisions
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'''Accounting''', also known as '''bookkeeping''' or '''accountancy''' (the practice of accounting), is the process of recording transactions within a business. Before the modern era, many businesses used cash-basis accounting, which simply records when money is spent. Today most countries use the double-entry method, which was invented in Italy during the renaissance<ref>http:// | '''Accounting''', also known as '''bookkeeping''' or '''accountancy''' (the practice of accounting), is the process of recording transactions within a business. Before the modern era, many businesses used cash-basis accounting, which simply records when money is spent. Today most countries use the double-entry method, which was invented in Italy during the renaissance.<ref>{{cite web|date=2 September 2013|title=Luca Pacioli biography|url=http://www-history.mcs.st-and.ac.uk/Biographies/Pacioli.html|publisher=University of St Andrews, Scotland|accessdate=12 October 2013}}</ref> In the double entry method, all transactions (not just cash transactions) are recorded, and every transaction has 2 entries: a credit and a debit. Practicing accountants are expected to conform to a set of guidelines known as Generally Accepted Accounting Practices, or GAAP. | ||
The information generated by accounting is used for many purposes. One is in [[financial management]], where a business can be analyzed using various ratios of its accounting numbers. A company's books are also used to determine tax liability. | The information generated by accounting is used for many purposes. One is in [[financial management]], where a business can be analyzed using various ratios of its accounting numbers. A company's books are also used to determine tax liability. | ||
Accounting can be divided into several fields including [[financial accounting]], [[management accounting]], [[tax accounting]] and [[cost accounting]]. Financial accounting focuses on the reporting of an organization's financial information, including the preparation of [[financial statement]]s, to the external users of the information, such as investors, regulators and [[suppliers]]. Management accounting focuses on the measurement, analysis and reporting of information for internal use by management to enhance business operations. 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.<ref name = "L 2009">{{cite book |last=Lung |first=Henry |year=2009 |title=Fundamentals of Financial Accounting |publisher=Elsevier }}</ref> [[Accounting information system]]s are designed to support accounting functions and related activities. | |||
==Certification== | ==Certification== | ||
In the United States, publicly traded [[corporations | In the United States, publicly traded [[Corporation|corporations]] are required to provide financial data to the public. This data must be independently verified, or attested to, by a special class of accountants known as [[Certified Public Accountant|Certified Public Accountants]], or CPA. Worldwide, there are classes of certification, such as a Chartered Accountant in the UK. | ||
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==Footnotes== | |||
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Latest revision as of 12:54, 6 September 2024
Accounting, also known as bookkeeping or accountancy (the practice of accounting), is the process of recording transactions within a business. Before the modern era, many businesses used cash-basis accounting, which simply records when money is spent. Today most countries use the double-entry method, which was invented in Italy during the renaissance.[1] In the double entry method, all transactions (not just cash transactions) are recorded, and every transaction has 2 entries: a credit and a debit. Practicing accountants are expected to conform to a set of guidelines known as Generally Accepted Accounting Practices, or GAAP.
The information generated by accounting is used for many purposes. One is in financial management, where a business can be analyzed using various ratios of its accounting numbers. A company's books are also used to determine tax liability.
Accounting can be divided into several fields including financial accounting, management accounting, tax accounting and cost accounting. Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers. Management accounting focuses on the measurement, analysis and reporting of information for internal use by management to enhance business operations. 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.[2] Accounting information systems are designed to support accounting functions and related activities.
Certification
In the United States, publicly traded corporations are required to provide financial data to the public. This data must be independently verified, or attested to, by a special class of accountants known as Certified Public Accountants, or CPA. Worldwide, there are classes of certification, such as a Chartered Accountant in the UK.
Attribution
- Some content on this page may previously have appeared on Wikipedia.
Footnotes
- ↑ Luca Pacioli biography. University of St Andrews, Scotland (2 September 2013). Retrieved on 12 October 2013.
- ↑ Lung, Henry (2009). Fundamentals of Financial Accounting. Elsevier.