Experience Definitions - Accounting

Accounting is the process of providing quantitative information about economic entities to aid users in making decisions concerning the allocation of economic resources. An economic entity means all types of business and includes churches, hospitals, charitable organizations, municipalities, governments and other organizations. Users of accounting information include individuals external and internal to the entity. External users are outside the business or other entities that need to decide whether to engage or continue to engage in some activity (for example, investing, granting credit, business partnerships, or procuring goods or services) with the entity. Internal users are inside the business or other entities that need to make decisions (planning, controlling, and problem solving) concerning the operations and activities of the entity. Providing information includes the series of activities leading up to and including communicating the information through a report or some other communication process. These activities include:

• Bookkeeping activities including:
  • Identifying the information that has an economic impact on the entity;
  • Measuring the information in quantitative terms, usually monetary;
  • Recording the information in the accounting system;
  • Retaining the information for future use, and
  • Communicating the information by means of an accounting system.
• Managing accounts payable or accounts receivable;
• Managing fixed asset accounts;
• Managing inventory accounts.

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