Accounting has been defined as the accounting professor at the University of Michigan William A Paton as a basic function: "facilitating the administration of economic activity. This function has two closely related phases: 1) measuring and identifies the economic data, and 2) reporting the results of this process to interested parties. "
For example, an accounting firm periodically measure the profit and loss account for a month, quarter or year and publish the results in a profit and loss account will make as a tax return. These statements include elements such claims (the company was) and liabilities (what the company owes). It can also be quite complicated with issues such as retained earnings and accelerated depreciation. The higher levels of accounting and the organization.
Much of the accounts but also about the basic accounting period. It is the process that pays every transaction, every bill, every cent spent due and cents for every dollar earned.
But can the owners of the company, the individual owners or millions of shareholders, are included with summaries of these transactions in the financial statement. The financial statement summarizes a company's assets. The value of an asset is what it costs when it was first acquired. The financial statement also records what were the sources of these assets. Some assets will be repaid in the form of loans. Profits are also an asset of the company.
In what is called double-entry bookkeeping, the liabilities are also summarized. Of course a company wants to show offset a larger amount of assets, liabilities and profits. The management of these two elements is the essence of accounting.
It is a system for the possibility that each company or individual to develop their own systems of accounting, the result would be chaos!
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