What is accounting?
submitted by moose

sly

Accounting is the language of business. It helps you see a company's financial health. It involves reporting and analyzing financial data.

Jake Stone

You could say it’s an objective way that companies communicate their financial story to stakeholders. They need to communicated with investors, managers, or maybe even potential partners. You could use regular language to say your business is reliable, stable, promising etc. However, people want to see the data. They want to know the numbers behind the hype.

Larry Graham

A business operates in a variety of ways, and accounting is the numerical record of those operations. A company buys new things, builds new things, researches new things, and then sells those things. They go into some debt in the process. Accounting is the detailed financial record of every one of those activities.

When the business buys things, money is subtracted from cash, and value is added to inventory.

When the business sells things. inventory goes down, and revenue goes up.

Accounting is the tale of a business's day to day activity.

isawthat

That's a pretty big question, but to summarize, accounting is record keeping for a company's finances. When they do anything related to money, a record is kept. That is what accounting is for.

To go a bit beyond that, accounting also involves looking at the data and analyzing how a company is performing.

You could say that's the difference between bookkeeping and accounting. Bookkeeping just makes records, and accounting involves financial analysis. That's not the traditional definition, per se, but that's one way of looking at it in modern times.

These days, accounting involves following certain uniform standards of accounting. It makes it easier for tax entities, if we want to be honest. It does also make it easier for investors to assess different opportunities with a consistent system. They can look at 5 companies side by side and basically understand which one has the strongest position. If they used different standards of accounting, that would be much more difficult.

It's not just about who has the most money. It's also about the potential to make money, and the ability of the company to stay in business for the long-term. Accounting formulas and ratios will give you these insights.

Stewart

Accounting is the process of recording and analyzing a company's financial activities.