Accounting

Definition of Accounting as it relates to Business, Business Law, International Business

Accounting is the systematic recording, reporting, and analysis of financial transactions of a business. It involves summarizing, analyzing, and reporting these transactions to oversight agencies, regulators, and tax collection entities. The financial statements that summarize a company's operations, financial position, and cash flows are crucial for the business to operate effectively. Accounting also includes the process of auditing which is done by an independent accountant to ensure the integrity of financial statements. It provides information to users such as investors, creditors, management, and tax authorities about the financial position, performance and changes in financial position of a business that is useful in making economic decisions. In international business, accounting standards can vary between countries, hence the need for harmonization of accounting standards. Business law also has provisions relating to accounting and auditing. It includes requirements for maintaining proper books of accounts, their audit and the punishment for non-compliance with these requirements.

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