Editing Accounting (section)

{{short description|Measurement, processing and communication of financial information about economic entities}}
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'''Accounting''', also known as '''accountancy''', is the process of recording and processing information about [[economic entity|economic entities]], such as [[business]]es and [[corporation]]s.<ref name="NP 2013">{{cite book |last1=Needles |first1=Belverd E. |title=Principles of Financial Accounting |last2=Powers |first2=Marian |publisher=Cengage Learning |year=2013 |edition=12 |series=Financial Accounting Series}}</ref><ref>{{Cite report |date=November 1940 |title=Accounting Research Bulletins No. 7 Reports of Committee on Terminology |url=http://clio.lib.olemiss.edu/cdm/ref/collection/deloitte/id/9342 |publisher=Committee on Accounting Procedure, American Institute of Accountants |access-date=31 December 2013 |archive-date=7 January 2014 |archive-url=https://web.archive.org/web/20140107100208/http://clio.lib.olemiss.edu/cdm/ref/collection/deloitte/id/9342 |url-status=dead }}</ref> Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including [[investor]]s, [[creditor]]s, [[management]], and [[Regulatory agency|regulators]].<ref name = "UW Dept">{{cite web |url=http://www.foster.washington.edu/academic/departments/accounting/Pages/accounting.aspx |title=Department of Accounting |year=2013 |website=Foster School of Business |access-date=31 December 2013 |archive-date=19 March 2015 |archive-url=https://web.archive.org/web/20150319223850/http://www.foster.washington.edu/academic/departments/accounting/Pages/accounting.aspx |url-status=live }}</ref> Practitioners of accounting are known as [[accountant]]s. The terms "accounting" and "[[financial reporting]]" are often used interchangeably.<ref name="Ias">{{cite journal |title=The introduction of International Accounting Standards in Europe: Implications for international convergence |date=2005 |url=https://www.tandfonline.com/doi/abs/10.1080/0963818042000338013 |publisher=Taylor & Francis Online |doi=10.1080/0963818042000338013 |access-date=3 April 2023 |archive-date=3 April 2023 |archive-url=https://web.archive.org/web/20230403191956/https://www.tandfonline.com/doi/abs/10.1080/0963818042000338013 |url-status=live |last1=Schipper |first1=Katherine |journal=European Accounting Review |volume=14 |pages=101–126 |s2cid=153931720 |url-access=subscription }}</ref>

Accounting can be divided into several fields including [[financial accounting]], [[management accounting]], [[tax accounting]] and [[cost accounting]].<ref name = "WC 1981" /> Financial accounting focuses on the reporting of an organization's financial information, including the preparation of [[financial statement]]s, to the external users of the information, such as investors, regulators and [[suppliers]].<ref name = "HDF 2006"/> Management accounting focuses on the measurement, analysis and reporting of information for internal use by management to enhance business operations.<ref name = "NP 2013"/><ref name = "HDF 2006" /> The recording of financial transactions, so that summaries of the financials may be presented in financial reports, is known as [[bookkeeping]], of which [[double-entry bookkeeping]] is the most common system.<ref name = "L 2009">{{cite book |last=Lung |first=Henry |year=2009 |title=Fundamentals of Financial Accounting |publisher=Elsevier }}</ref> [[Accounting information system]]s are designed to support accounting functions and related activities.

Accounting has existed in various forms and levels of sophistication throughout human history. The double-entry accounting system in use today was developed in medieval Europe, particularly in [[Venice]], and is usually attributed to the Italian mathematician and Franciscan friar [[Luca Pacioli]].<ref name=jkdiwan>{{cite book|last=DIWAN|first=Jaswith|title=ACCOUNTING CONCEPTS & THEORIES|publisher=MORRE|location=LONDON|id=id# 94452|pages=001–002}}</ref>  Today, accounting is facilitated by [[:Category:Accounting organizations|accounting organizations]] such as standard-setters, [[accounting networks and associations|accounting firms]] and [[professional accounting body|professional bodies]]. Financial statements are usually audited by accounting firms,<ref name = "Parliament Auditors 1"/> and are prepared in accordance with [[accounting standard|generally accepted accounting principles]] (GAAP).<ref name = "HDF 2006"/> GAAP is set by various standard-setting organizations such as the [[Financial Accounting Standards Board]] (FASB) in the United States<ref name = "NP 2013" /> and the Financial Reporting Council in the [[United Kingdom]]. As of 2012, "all major economies" have plans to [[Convergence (accounting)|converge]] towards or adopt the [[International Financial Reporting Standards]] (IFRS).<ref name=globalcon>{{Cite web|publisher=[[IFRS Foundation]] and [[International Accounting Standards Board]] |website=ifrs.org |url=http://www.ifrs.org/Use+around+the+world/Use+around+the+world.htm?WBCMODE=PresentationUnpublished |title=The move towards global standards |year=2011 |archive-url=https://web.archive.org/web/20111225111828/http://www.ifrs.org/Use+around+the+world/Use+around+the+world.htm?WBCMODE=PresentationUnpublished |archive-date=25 December 2011 |url-status=dead |access-date=27 April 2012}}</ref><ref>{{cite web |title=The importance of high quality accounting standards |url=https://www.proquest.com/openview/113ef6fb20852f7024ae491923c7e84c/1?pq-origsite=gscholar&cbl=3330 |access-date=3 April 2023 |archive-date=3 April 2023 |archive-url=https://web.archive.org/web/20230403192502/https://www.proquest.com/openview/113ef6fb20852f7024ae491923c7e84c/1?pq-origsite=gscholar&cbl=3330 | via=ProQuest |url-status=live }}</ref>