What Are The Phrases Of Accounting?


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Matthew Porter answered
Accounting is the action or process of keeping financial accounts. The process of accountancy is important in communicating financial information about a business to users such as shareholders and managers.

Accounting is often referred to as the 'language of business' because it is the way by which financial information about a business identity is reported to a wide range of groups and people. Accounting that focuses on reporting within a business is referred to as management accounting. When accounting is focused on reporting and providing information to people outside of the business entity, it is usually referred to as financial accounting.

Financial accounting provides information to present to potential shareholders, creditors, analysts, economists and government agencies.

The principles of accountancy are applied to business entities in three divisions. These are:

• Accounting
The art of recording, classifying and summarizing in the financial character and results of an entity. Accounting is normally performed by an accountant.

• Bookkeeping
The recording of financial transactions (including sales, purchases, income and payments by an individual or organization). Bookkeeping is usually performed by a bookkeeper. The most common methods of bookkeeping are the single-entry bookkeeping system and the double-entry bookkeeping system.

• Auditing
An official financial inspection and examination of an individual or organization's accounts, typically undertaken by an independent body.

You can find a glossary of key accounting phrases and their definitions by visiting one of the following websites:
• Business Accounting Guides -
• -
• Rasmussen College -

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