Accounting: Difference between revisions
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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<ref>http://en.wikipedia.org/wiki/Luca_Pacioli</ref>. In the double entry method, all transactions (not just cash transactions) are recorded, and every transaction has 2 entries: a credit and a debit. | '''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<ref>http://en.wikipedia.org/wiki/Luca_Pacioli</ref>. In the double entry method, all transactions (not just cash transactions) are recorded, and every transaction has 2 entries: a credit and a debit. | ||
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. | |||
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Revision as of 03:05, 9 February 2008
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.
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.