Accounting

Definition of Accounting

Accounting is the systematic process of recording, summarizing, analyzing, and interpreting financial transactions and information related to the economic activities of individuals, businesses, organizations, or government entities.

The primary purpose of accounting is to provide accurate and relevant financial information that helps stakeholders make informed decisions about the entity's financial performance, position, and activities.

What is Accounting?

Accounting is the language of business and finance. It involves collecting and organizing financial data, processing it into meaningful reports and statements, and using that information to assess the financial health of an entity and facilitate various financial decisions.

What are the primary branches in Accounting?

The primary branches of accounting are:

Financial Accounting

This branch focuses on preparing financial statements for external stakeholders, such as investors, creditors, and regulatory authorities. Its objective is to provide an accurate and objective representation of the entity's financial performance and position.

Management Accounting

Also known as managerial accounting, this branch is concerned with providing internal information and analysis to support management decision-making. It involves budgeting, cost analysis, performance evaluation, and other managerial reports.