Accounting

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Accounting, also known as bookkeeping or accountancy (the practice of accounting), is the process of recording transactions within a business. Before the modern era, many businesses used cash-basis accounting, which simply records when money is spent. Today most countries use the double-entry method, which was invented in Italy during the renaissance.^[1] In the double entry method, all transactions (not just cash transactions) are recorded, and every transaction has 2 entries: a credit and a debit. Practicing accountants are expected to conform to a set of guidelines known as Generally Accepted Accounting Practices, or GAAP.

The information generated by accounting is used for many purposes. One is in financial management, where a business can be analyzed using various ratios of its accounting numbers. A company's books are also used to determine tax liability.

Accounting can be divided into several fields including financial accounting, management accounting, tax accounting and cost accounting. 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. Management accounting focuses on the measurement, analysis and reporting of information for internal use by management to enhance business operations. 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.^[2] Accounting information systems are designed to support accounting functions and related activities.

Certification[edit]

In the United States, publicly traded corporations are required to provide financial data to the public. This data must be independently verified, or attested to, by a special class of accountants known as Certified Public Accountants, or CPA. Worldwide, there are classes of certification, such as a Chartered Accountant in the UK.

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