Accounting: Defined for Businesses

Accounting is the process of measuring and reporting financial information about businesses, organisations, and individuals. In simple terms, accounting records what happens to money over time. For example, the accounting process keeps track of how much money you earn, spend, save, borrow, invest, and give away. It also measures how well you do at work, school, home, and social events.

"Accounting" comes from the Latin word accountare, meaning "to reckon." This term refers to the basic principle behind accounting: we must record every transaction to know where our money goes.

Once completed, we can see whether we spent too much or saved enough. We can compare one month's expenses against another month's income. And we can use this information to make decisions about future spending and saving.