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Accounting is the recording of financial transactions of a business or organization. It also includes the process of summarizing, analyzing and reporting these transactions in financial statements. Because proper accounting is vital to many people and businesses, it is formalized and regulated. It must be systematic, comprehensive and follow widely accepted, standardized accounting principles.

Accounting is a complex profession that requires many years of study. Aspiring accountants must pass multiple tests to gain a professional designation of Certified Public Accountant (CPA), in the United States. Other countries have similar designations with slightly different names.

The financial statements that accountants create provide critical information for many key people. A small firm might employ a single bookkeeper, while a large firm will need a correspondingly large team of accountants.

For example, national chain Billy Bob’s Burgers may have a team of 15 accountants compiling the company’s financial transactions into concise reports. Each month, they may have to prepare detailed reports for the company’s management team. Managers use these reports to decide how to guide the company forward.

Each quarter, they may have to prepare reports for the CFO to present to industry analysts. Analysts calculate the value and health of the company and make recommendations to brokerage firms that sell the company stock. Moreover, every year, the accountants may have to prepare annual statements that investors, auditors and the IRS use to value, regulate and tax the company.

 

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