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Definition of Accounting

Accounting involves systematically recording all financial transactions of a business. It includes summarizing these transactions, analyzing them, and reporting them to oversight bodies. The financial statements produced by accounting consolidate thousands of transactions into concise summaries of a company's operations, finances, and cash flows over a period. Accounting is essential for businesses and can be handled by bookkeepers or accountants using generally accepted accounting principles like double-entry bookkeeping.

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65 views

Definition of Accounting

Accounting involves systematically recording all financial transactions of a business. It includes summarizing these transactions, analyzing them, and reporting them to oversight bodies. The financial statements produced by accounting consolidate thousands of transactions into concise summaries of a company's operations, finances, and cash flows over a period. Accounting is essential for businesses and can be handled by bookkeepers or accountants using generally accepted accounting principles like double-entry bookkeeping.

Uploaded by

arvinapriska
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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DEFINITION OF ACCOUNTING

BY : ARVINA (07)
Agenda Layout

What Is Accounting?

Many Kinds of Accounting


Accounting...
Accounting is the systematic and comprehensive rec
ording of financial transactions pertaining to a busine
ss. Accounting also refers to the process of summari
zing, analyzing and reporting these transactions to ov
ersight agencies, regulators and tax collection entitie
s. The financial statements that summarize a large c
ompany's operations, financial position and cash flow
s over a particular period are a concise summary of h
undreds of thousands of financial transactions it may
have entered into over this period.
Accounting

Breaking Down Accounting


Accounting is one of the key functions for almost any business. It may be handl
ed by a bookkeeper or an accountant at a small firm, or by sizable finance dep
artments with dozens of employees at larger companies. The reports generate
d by various streams of accounting, such as cost accounting and management
accounting, are invaluable in helping management make informed business de
cisions. While basic accounting functions can be handled by a bookkeeper, adv
anced accounting is typically handled by qualified accountants who possess de
signations such as Certified Public Accountant (CPA) in the United States, or C
hartered Accountant (CA), Certified General Accountant (CGA) or Certified Ma
nagement Accountant (CMA) in Canada.
Kind of Accounting

Creating Financial Statements

Generally Accepted Accounting Principles

Example of Double Entry Accounting

D
.
Financial Accounting vs. Management Accounting

D
Financial Accounting vs. Cost Accounting
Creating Financial Statements Generally Accepted
Accounting Principles
The financial statements that summarize In most cases, accountants use gener
a large company's operations, financial ally accepted accounting principles (G
position and cash flows over a particular AAP)when preparing financial stateme
period are concise statements based on nts. GAAP is a set of standards relate
thousands of financial transactions. As a d to balance sheet identification, outst
result, all accounting designations are th anding share measurements and othe
e culmination of years of study and rigor r accounting issues, and its standards
are based on double-entry accounting,
ous examinations combined with a mini
a method which enters each expense
mum number of years of practical accou
or incoming revenue in two places on
nting experience. a company's balance sheet.
Example of Double Entry Accounting Financial Accounting vs.
Management Accounting
To illustrate double-entry accounting, ima Financial accounting refers to the pro
gine a business issues an invoice to one cesses accountants use to generate t
of its clients. An accountant using the do he annual accounting statements of a
uble-entry method enters a debit under t firm. Management accounting uses m
he accounts receivables column on the b uch of the same processes but utilize
alance sheet and a credit under the inco s information in different ways. Namel
me statement's revenue column. When t y, in management accounting, an acc
he client pays the invoice, the accountan ountant generates monthly or quarterl
y reports that a business's manageme
t credits accounts receivables and debits
nt team can use to make decisions ab
cash. Double-entry accounting is also cal
out how the business operates.
led balancing the books, as all of the acc
ounting entries are balanced against eac
h other. If the entries aren't balanced, the
accountant knows there must be a mista
ke somewhere in the ledger.
Financial Accounting vs. Cost Accounting
Just as management accounting helps businesses mak
e decisions about management, cost accounting helps
businesses make decisions about costing. Essentially, c
ost accounting considers all of the costs related to prod
ucing a product. Analysts, managers, business owners
and accountants use this information to determine what
their products should cost. In cost accounting, money is
cast as an economic factor in production, whereas in fin
ancial accounting, money is considered to be a measur
e of a company's economic performance.
D
D
Thank you
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