Accounting Flashcards, test questions and answers

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What is Accounting?

Accounting is the process of analyzing, recording and communicating financial information about an organization. It involves tracking income and expenses, assessing taxes, creating financial statements, managing accounts receivable and payable, monitoring investments and more. In short, accounting is a language used to communicate economic activities across the globe. The main purpose of accounting is to provide relevant financial information for decision makers within an organization or government agency so that they can make informed decisions regarding their finances. This includes measuring performance by reporting on revenue growth/decrease over time as well as understanding what caused it; providing forecasts that assist in predicting future revenue streams; helping to assess risk levels associated with different investment choices; facilitating budgeting processes; helping with tax planning strategies; and much more. Accounting also plays a role in auditing practices since it helps ensure that organizations are following proper procedures for their transactions. At its most basic level, accounting provides data that allows businesses to track their financial health such as sales figures compared against expenses incurred during operations. Businesses use this data when making decisions around marketing strategy, operational efficiencies or even expansion plans into new markets or products lines. On a larger scale, governments tend to use accounting practices when allocating resources among various departments while non-profit organizations often rely on accurate accounting reports from donors who contribute financially towards specific causes or projects being undertaken by the organization itself. In today’s ever-evolving business environment where digital innovations have dramatically changed how companies conduct business operations at home and abroad efficient use of technology has become paramount in keeping up with market trends while remaining competitively agile enough to remain viable both now and into the future -accounting remains an essential discipline needed for success in any industry sector regardless of size or scope of operation . Without reliable data indicating historical performance along with projections based upon current conditions no company can hope to successfully strategize long term goals nor accurately measure progress made towards achieving them efficiently either now nor going forward into the future.