Accounting is a discipline that involves recording financial transactions and then turning them into information and reports that can be used for analysis and decision-making. It is an important function that is usually handled by either a bookkeeper or accountant in small businesses, or by sizable finance departments with dozens of employees at large corporations. Accounting is one of the most essential functions in any business because it provides a clear picture of the company’s financial health and performance, including whether or not it is making money.
The field of accounting is comprised of many different activities, ranging from preparing tax returns and other official documents to analyzing data for internal use in decision-making and strategic planning. The main components of the accounting process include establishing and maintaining recordkeeping practices that are both accurate and efficient. This includes identifying and classifying transactions, recording them in an accounting system and presenting the results of these measurements in the form of financial statements for various time periods. These statements are often presented to outside parties, such as investors and lenders. Publicly traded companies are required to follow a set of guidelines known as generally accepted accounting principles (GAAP), which are overseen by an independent body called the Financial Accounting Standards Board.
In addition to recordkeeping, accounting also includes processing payroll and ensuring that tax payments are made on time. Depending on the nature of the company, other functions may include cost accounting (which focuses on how much it costs to produce products) and managerial accounting, which is used to create budgets and make decisions about resource allocation and operational efficiency. Buchhaltung