what is accounting?

Question

what is accounting?

Answer 1

Accounting is an activity that can be termed an art as well as a science.



Accouting (financial accounting more so) is the act of collecting, recording, financial information in order to derive information that is capable of being analysed, summarized and reported.



It generally considers only information (transactions) that are capable of being viewed (measured) in monetary terms.



However, in modern day computerised accounting environments there is a lot of other relevant information that is recorded along with the financial information (like inventory data) to make accounting a complex information collection, processing and retreival system.



Accounting can be a complete record of all the activities of a business, providing details of every aspect of the business, allowing the analysis of business, and providing insight into future prospects.



Bookkeeping is the practice of recording transactions. Bookkeepers tend to focus on the details, recording transactions in an efficient and organized manner, and they may or may not see the overall picture.



Accountants use the work done by bookkeepers to produce and analyze financial reports. Although accounting follows the same principles and rules as bookkeeping, an accountant can design a system that will capture all of the details necessary to satisfy the needs of the business—managerial, financial reporting, projection, analysis, and tax reporting. A good accountant will create a system of financial reporting that gives a complete picture of a business.



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Answer 2

Accountancy (profession) or accounting (methodology) is the measurement, disclosure or provision of assurance about information that helps managers and other decision makers make resource allocation decisions. Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated. Auditing, a related but separate discipline, is the process whereby an independent auditor examines an organization's financial statements in order to express an opinion -- that conveys reasonable but not absolute assurance -- as to the fairness and adherence to generally accepted accounting principles, in all material respects.



Practitioners of accountancy are known as accountants. Officially licensed accountants are recognized by titles such as Chartered Accountant (UK, Canada, India, Australia), Certified Public Accountant (US, Hong Kong), Certified Management Accountant (Canada), Certified General Accountant (Canada), or Certified Practicing Accountant (Australia). Commonwealth countries (Australia and Cananda) often recognise both the certified and chartered accounting bodies. The majority of "public" accountants in Canada are Chartered Accountants; however, Certified General Accountants are also authorized by legislation to practise public accounting and auditing in all Canadian provinces, except Ontario and Quebec, as of 2005.



Accountancy attempts to create accurate financial reports that are useful to managers, regulators, and other stakeholders such as shareholders, creditors, or owners. The day-to-day record-keeping involved in this process is known as bookkeeping.



At the heart of modern financial accounting is the double-entry book-keeping system. This system involves making at least two entries for every transaction: a debit in one account, and a corresponding credit in another account. The sum of all debits should always equal the sum of all credits. This provides an easy way to check for errors. This system was first used in medieval Europe, although claims have been made that the system dates back to Ancient Greece.



According to critics of standard accounting practices, it has changed little since. Accounting reform measures of some kind have been taken in each generation to attempt to keep bookkeeping relevant to capital assets or production capacity. However, these have not changed the basic principles, which are supposed to be independent of economics as such.