What is accounting?

Accounting is the process of recording, classifying, analyzing, and reporting a business's financial activity. It transforms financial data into reports and insights that help owners, lenders, investors, and regulators understand a company's financial performance and position.

Example: A business records sales, expenses, and payroll transactions throughout the month, then uses that information to produce financial statements.

Related terms: Bookkeeping, Financial Statements, General Ledger, Accounting Cycle