Accounting

Accounting identifies, records, and communicates the economic events of a company to interested parties().When identifying economic events in a company the events related to its business are selected. Then, it records the events to show the history of the finances in the area. After the records are completed, the company communicates the information through accounting reports. Interested parties, or users, include managers, financial directors and company officers. It also includes investors and creditors.

The four basic financial statements are income statement, retained earnings statement, balance sheet, and statement of cash flow.

The income statement reports the profitability of a company of a specified period of time. These statements list revenue, expenses, and net worth or loss. When the revenue is higher than the expenses the company has net income. When the expenses are more than the revenue the company experiences net loss.

A retained earnings statement shows changes in these earning over time.

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Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers.[1] The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in selecting the information that is relevant to the user and is reliable.[2] The principles of accountancy are applied to business entities in three divisions of practical art, named accounting, bookkeeping, and auditing.[3]

Accountancy is defined by the Oxford English Dictionary (OED) as "the profession or duties of an accountant".

Accounting is defined by the American Institute of Certified Public Accountants (AICPA) as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character,...