Obviously, if each business organisation conveys its information in its own way, we will have a babel of unusable financial data. The government, which decides how much tax should be collected from the company.Analysts and brokerage firms dealing with the company’s stock.Investors who want to know how the business is doing.While a small business may have an accountant or a bookkeeper to record money transactions, a large corporation has an accounts department, which supplies information to: The job of accounting is done by professionals who have educational degrees acquired after years of study. Accounting uses a formalised and regulated system that follows standardised principles and procedures. Recording every financial transaction is important to a business organisation and its creditors and investors. The art of recording, classifying, summarising in a significant manner and in terms of money, transactions and events which are, in part at least of financial character, and interpreting the results thereof.Īccounting not only records financial transactions and conveys the financial position of a business enterprise it also analyses and reports the information in documents called “financial statements.” The American Institute of Certified Public Accountants defines accounting as:
The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information. However, a short and sweet description of accounting does exist:Īccounting is the language of business efficiently communicated by well-organised and honest professionals called accountants.Ī more academic definition of accounting is given by the American Accounting Association: The worldview of accounting and accountants may certainly involve some unhelpful characters poring over formidable figures stacked up in indecipherable columns. Accounting Concepts, Principles and Basic Terms
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