Accounting

Accounting is the measurement, disclosure or provision of assurance about information that helps managers and other decision makers make resource allocation decisions.

1 Background
2 U.S. certification of accountants
3 See Also
4 Source
5 External Links
6 See Also

Background

Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated. Auditing, a related but separate discipline, is the process whereby an independent auditor examines an organization's financial statements in order to express an opinion -- that conveys reasonable but not absolute assurance -- as to the fairness and adherence to generally accepted accounting principles (GAPP), in all material respects.

Practitioners of accounting are known as accountants. Officially licensed accountants are recognized by titles such as Chartered Accountant (UK, Canada), Certified Public Accountant (US), Certified Management Accountant (Canada). or Certified General Accountant (Canada). The majority of "public" accountants in Canada are Chartered Accountants; however, Certified General Accountants are also authorized by legislations to practise public accounting and auditing in all Canadian provinces, except Quebec as of 2005.

Accounting attempts to create accurate financial reports that are useful to managers, regulators, and other stakeholders such as shareholders, creditors, or owners. The day-to-day record-keeping involved in this process is known as bookkeeping.

At the heart of modern financial accounting is the double-entry book-keeping system.

This system involves making at least two entries for every transaction: a debit in one account, and a corresponding credit in another account. The sum of all debits should always equal the sum of all credits. This provides an easy way to check for errors.

U.S. certification of accountants

In the United States, practicing accountants include Certified Public Accountants (CPAs), Certified Internal Auditors (CIAs), Certified Management Accountants (CMAs) and Accredited Business Accountants (ABAs). The difference between these certifications is primarily the types of services provided, although individuals may earn more than one certification. Additionally, much accounting work is performed by uncertified individuals, who may be working under the supervision of a certified accountant.

A CPA is licensed by the state of his/her residence to provide auditing services to the public, although most CPA firms also offer accounting, tax, litigation support, and other financial advisory services. The requirements for receiving the CPA license varies from state to state, although the passage of the Uniform Certified Public Accountant examination is required by all states. This examination is designed and graded by the American Institute of Certified Public Accountants.

A CIA is granted a certificate from the Institute of Internal Auditors (IIA), provided that the candidate passed a rigorous examination of four parts. A CIA mostly provides his/her services directly to their employers rather than the public.

A CMA is granted a certificate from the Institute of Management Accountants (IMA), provided that the candidate passed a rigorous examination of four parts and meet the practical experience requirement from the IMA. A CMA mostly provides his/her services directly to his/her employers rather than the public. A CMA can also provide his services to the public, but to an extent much lesser than that of a CPA.

An ABA is granted accreditation from the Accreditation Council for Accountancy and Taxation (ACAT), provided that the candidate passed the eight-hour Comprehensive Examination for Accreditation in Accounting which tests proficiency in financial accounting, reporting, statement preparation, taxation, business consulting services, business law, and ethics. An ABA specializes in the needs of small-to-mid-size businesses and in financial services to individuals and families. In states where use of the word "accountant�? is not permitted, the practitioner may use Accredited Business Advisor.

The United States Department of Labor's Bureau of Labor Statistics estimates that there are about one million persons employed as accountants and auditors in the U.S.

U.S. tax law grants accountants a limited form of accountant-client privilege.

Source

Source: Much of the material in this entry came originally from this entry in Wikipedia.

External Links

Wikibooks: Accounting
Accounting Software Key Features
wikicpa.com all things related to being a Certified Public Accountant