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Accounting Definitions

Accounting is the measurement, processing, and communication of financial information about economic entities. It was established in 1494 by Luca Pacioli and measures the results of an organization's economic activities. Accounting can be divided into fields like financial accounting, management accounting, auditing, and tax accounting. Financial accounting focuses on external reporting while management accounting focuses on internal use. Accounting information systems support accounting functions and bookkeeping records transactions for financial summaries and reports.

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41 views

Accounting Definitions

Accounting is the measurement, processing, and communication of financial information about economic entities. It was established in 1494 by Luca Pacioli and measures the results of an organization's economic activities. Accounting can be divided into fields like financial accounting, management accounting, auditing, and tax accounting. Financial accounting focuses on external reporting while management accounting focuses on internal use. Accounting information systems support accounting functions and bookkeeping records transactions for financial summaries and reports.

Uploaded by

Senoro Steven
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Accounting or accountancy is the measurement, processing and communication of financial information about economic

entities.[1][2] The modern field was established by the Italian mathematician Luca Pacioli in 1494.[3] Accounting, which has
been called the "language of business",[4] measures the results of an organization's economic activities and conveys this
information to a variety of users, including investors, creditors, management, and regulators.[5] Practitioners of accounting are
known as accountants. The terms 'accounting' and 'financial reporting' are often used as synonyms.
Accounting can be divided into several fields including financial accounting, management accounting, auditing, and tax
accounting.[6]Accounting information systems are designed to support accounting functions and related activities. Financial
accounting focuses on the reporting of an organization's financial information, including the preparation of financial
statements, to external users of the information, such as investors, regulators and suppliers;[7] and management accounting
focuses on the measurement, analysis and reporting of information for internal use by management.[1][7] The recording of
financial transactions, so that summaries of the financials may be presented in financial reports, is known as bookkeeping,
of which double-entry bookkeeping is the most common system.[8]
Accounting is facilitated by accounting organizations such as standard-setters, accounting firms and professional
bodies. Financial statements are usually audited by accounting firms,[9] and are prepared in accordance with generally
accepted accounting principles (GAAP).[7] GAAP is set by various standard-setting organizations such as the Financial
Accounting Standards Board (FASB) in the United States[1] and the Financial Reporting Council in the United Kingdom. As of
2012, "all major economies" have plans to converge towards or adopt the International Financial Reporting
Standards (IFRS).[10]

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