What is the definition of "accounting?"

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Accounting involves the systematic process of recording, summarizing, analyzing, and reporting financial information, including the profit and loss for a given time period and a company's assets and liabilities. Part of the process of accounting includes reporting financial information to third parties, such as tax collectors. Accounting is one of the core departments at any organization, as businesses rely on financial information to make decisions and develop strategies, and it is carried out by accountants and bookkeepers. It could also be part of a larger finance department.

In general, more complex accounting transactions are made by Certified Public Accountants (CPAs). When producing financial statements, accountants use what are called Generally Accepted Accounting Principles (GAAP), including what is called double-entry accounting, in which each expense or credit is entered in two places on a company's balance sheet. The sheets are then reconciled with each other in a process called balancing the books.

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Accounting is considered to be the job of reporting financial transactions. The process of recording those financial transactions and that includes "origination of the transaction, its recognition, processing, and summarization in the financial statements." The person who is in charge of the act of accounting is called the accountant. This activity is the basis of all business and responsibilities in financial areas of that business.

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