Accounts

What is Accounting?

Accounting is the systematic and comprehensive reporting of financial transactions related to a business. Accounting also covers the process of aggregation, analysis and reporting on these transactions by supervisors, regulators and tax authorities. Financial statements that summarize the operations, financial position and cash flows of a large company for a specific period are a summary of the hundreds of thousands of financial transactions that could have been made during that period.

Accounting: Creating Financial Statements

Financial reports that summarize information about a business’s business, financial position, and cash flow over a specific period are summaries based on thousands of financial transactions. As a result, all accounting estimates are the culmination of years of study and rigorous examinations, combined with a minimum number of years of practical practical experience in accounting.

Accounting: Generally Accepted Accounting Principles

In most cases, accountants use generally accepted accounting principles (GAAP) when preparing financial statements. GAAP is a set of standards related to the identification of balance sheets, unpaid shares and other accounting issues, and its standards are based on bilateral accounting, which includes any expenses or income on two items in the company’s balance sheet.

Accounting: an Example of Double-entry Reporting

To illustrate double-entry accounting, imagine that a company bills one of its customers. An accountant using the double entry method writes a debit in the balance and credit column below the income line in the income statement. When a customer pays an invoice, the accountant credits the receivables and debits cash. Accounting double entry is also called balance sheet balancing, since all accounts balance each other. If the records are not balanced, the accountant knows that there must be an error somewhere in the book.

Accounting: Financial Accounting Versus cost Accounting

Just as management accounting helps companies make management decisions, cost accounting helps enterprises make valuation decisions. In fact, cost accounting covers all costs associated with the production of a product. Analysts, managers, business owners and accountants use this information to determine the price of their products. In cost accounting, money is placed as an economic factor of production, whereas in financial accounting, money is considered an indicator of a company’s economic performance.