BusinessXtras

Accounting is the art of communicating financial information about a business entity to users such as shareholders and managers. It has also been defined by the AICPA as “The art of recording, classifying, and summarizing 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.”

A good deal of financial information is generally in the form of financial statement* that divulge in money terms the efficient resources under the control condition of management.

This monetary information is mainly used by managers, lenders, investors, tax authorities, regulators, and other administrators to arrive at resource allotment determinations between and within companies, organizations, and public agencies.

Accounting involves the process of recording, verifying, and reporting of the value of assets, liabilities, income, and expenses in the books of account (ledger) to which debit and credit entries (recognizing transactions) are chronologically posted to record changes in value.

Accounting is done by either internal or external auditors. External audit – carried out by independent auditors – examines the financial statements and accounting records in order to express an opinion as to the truth and fairness and adherence to Generally Accepted Accounting Principles (GAAP).

Generally used GAAP include the US Financial Accounting Standards Board (FASB), which issues FASB Pronouncements including Statements of Accounting Standards, and the International Accounting Standards Board (IASB), which issues International Financial Reporting Standards (IFRS). Types of accounting include financial accounting, management accounting, open-book accounting, tax accounting, and accounting scholarship.

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