Accounting systematically and comprehensively records financial transactions relating to a particular business. It also refers to the summarising and reporting of transactions to agencies and tax collection agencies.
Those in the profession of accountancy must order and manage the financial statements that summarize a company’s operations, financial position and cash flow over a particular period. These financial statements are a concise summary of many thousands of transactions that have been amalgamated over time.
Accountants are crucial to the underpinning of any company, with accounting the key function of any institutions! However, bookkeepers can also handle the accounts at small firms. Cost accounting and management accounting are invaluable in supporting management to make informed business decisions.
Often, accountants use generally accepted accounting principles, or GAAP, when preparing a company’s financial statements. GAAP is a set of standards concerned with balance sheet identification and outstanding share measurements. Its standards are based on double-entry accounting, a method which enters each expense in two places on a company’s balance sheet.
Double-entry accounting is also known by its alias, balancing the books, perhaps a more common, well-known term, derivative from the fact that all entries are balanced against each other. If the entries aren’t balanced, the accountant knows there must be a mistake hidden somewhere.
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