Accounting

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DEFINITION of 'Accounting'

The systematic and comprehensive recording of financial transactions pertaining to a business. Accounting also refers to the process of summarizing, analyzing and reporting these transactions. The financial statements that summarize a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period. Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with dozens of employees at larger companies.

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BREAKING DOWN 'Accounting'

The reports generated by various streams of accounting, such as cost accounting and management accounting, are invaluable in helping management make informed decisions. While basic accounting functions can be handled by a bookkeeper, advanced accounting is handled by qualified accountants who possess designations such as CPA (Certified Public Accountant) in the United States, or CA (Chartered Accountant)/CGA (Certified General Accountant)/CMA (Certified Management Accountant) in Canada. All accounting designations are the culmination of years of study and rigorous examinations, combined with a minimum number of years of practical accounting experience.

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RELATED FAQS
  1. How does transfer pricing help business?

    Transfer pricing involves the trade of goods or services between two related companies, and both can come out the winner. ... Read Full Answer >>
  2. What is accounting fraud?

    Accounting fraud is intentional manipulation of financial statements to create a facade of a company's financial health. ... Read Full Answer >>
  3. How are the three major financial statements related to each other?

    The information found on the financial statements of an organization is the foundation of corporate accounting. This data ... Read Full Answer >>
  4. How much will it cost to hire an accountant to do my taxes?

    Tax accounting generally costs less than $100 for simple tax returns, and it takes only a few hours to prepare and complete ... Read Full Answer >>
  5. What is the difference between IAS and GAAP?

    To answer this question, we must first define what IAS and GAAP are, in order to get a better grasp of the function they ... Read Full Answer >>
  6. What are some examples of general and administrative expenses?

    In accounting, general and administrative expenses represent the necessary costs to maintain a company's daily operations ... Read Full Answer >>

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