Accounting, simply put, is keeping track of money. This applies to an individual’s personal finances as well as a huge firm’s accounting books. Obviously it is much easier to keep track of personal finances, at least in most cases, which means that the accounting can be done without having to hire a professional accountant. However, when it comes to business matters accounting becomes much more complex. Its principles are needed to keep things in order as well as move a company to a better track.
The most basic activity in accounting is bookkeeping. Bookkeeping is the process of recording all financial transactions to keep track of the cash flow. Bookkeeping is usually an entry level job for accountants. Once they master the eye for detail that is needed to keep books straight, they often move on to the more complex job of analyzing the records kept by bookkeepers and writing up financial reports. The financial reports can be as simple as tabulated figures. They may also be as complex as projections. Some financial reports even help generate recommendations for a better tax strategy, or an employee healthcare and benefits package. They can also be used as a basis for decisions during mergers and acquisitions.
Another more specific aspect of accounting is auditing, which entails the careful examination of an individual or firm’s financial records for the purpose of determining its validity and reliability. Auditors can work for the company as an internal auditor or serve as an external auditor for multiple clients.