Accounting Basics

Accounting plays a vital role in facilitating all forms of economic activity in the private, public and nonprofit sectors. Business owners and managers, in both large and small companies, use accounting information to gauge how their business is doing. Non-profits track the cash flow and income needed to fuel their organization’s mission.

Government entities use accounting information operationally as well as to track tax revenues that may be due to them from other governmental entities and taxpayers.

In short, accounting is the language of business. Virtually nothing done in the business world doesn’t involve accounting information of some sort.

The American Accounting Association offers this definition: "The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information." In other words, accounting is the basis of all decision-making.