Accounting, also known as accountancy, is the processing of information about economic entities, such as businesses and corporations.[1][2] Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators.[3] Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used as synonyms.[4]

Accounting can be divided into several fields including financial accounting, management accounting, tax accounting and cost accounting.[5] Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers.[6] Management accounting focuses on the measurement, analysis and reporting of information for internal use by management.[1][6] 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.[7] Accounting information systems are designed to support accounting functions and related activities.

Accounting has existed in various forms and levels of sophistication throughout human history. The double-entry accounting system in use today was developed in medieval Europe, particularly in Venice, and is usually attributed to the Italian mathematician and Franciscan friar Luca Pacioli.[8] Today, 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).[6] 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][11]

  1. ^ a b c Needles, Belverd E.; Powers, Marian (2013). Principles of Financial Accounting. Financial Accounting Series (12 ed.). Cengage Learning.
  2. ^ Accounting Research Bulletins No. 7 Reports of Committee on Terminology (Report). Committee on Accounting Procedure, American Institute of Accountants. November 1940. Archived from the original on 7 January 2014. Retrieved 31 December 2013.
  3. ^ "Department of Accounting". Foster School of Business. Foster School of Business. 2013. Archived from the original on 19 March 2015. Retrieved 31 December 2013.
  4. ^ "The introduction of International Accounting Standards in Europe: Implications for international convergence". Taylor & Francis Online. Archived from the original on 3 April 2023. Retrieved 3 April 2023.
  5. ^ Cite error: The named reference WC 1981 was invoked but never defined (see the help page).
  6. ^ a b c Cite error: The named reference HDF 2006 was invoked but never defined (see the help page).
  7. ^ Lung, Henry (2009). Fundamentals of Financial Accounting. Elsevier.
  8. ^ DIWAN, Jaswith. ACCOUNTING CONCEPTS & THEORIES. LONDON: MORRE. pp. 001–002. id# 94452.
  9. ^ Cite error: The named reference Parliament Auditors 1 was invoked but never defined (see the help page).
  10. ^ "The move towards global standards". IFRS Foundation and IASB. 2011. Archived from the original on 25 December 2011. Retrieved 27 April 2012.
  11. ^ "The importance of high quality accounting standards". ProQuest. Archived from the original on 3 April 2023. Retrieved 3 April 2023.

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