What is accounting?

Accounting (Definition)

Accounting is a process where financial transactions of a business are recorded, sorted, and presented as reports or analysis. It transforms daily financial information into data that is easy to understand, so businesses can understand how much money is coming in and going out, how much assets and liabilities are worth, and which parts of the business are making money (or losing money). Accounting allows business owners to measure their financial health with outcomes reported to investors, creditors, and regulatory authorities. Reports are created periodically (monthly, quarterly, annually) and may include a balance sheet, profit and loss statement, cash flow statement, and taxes. While a bookkeeper can perform basic accounting tasks, certified accountants often handle the more complex ones, such as reporting finances to the respective governmental body.