Accounting is a way to track and record financial activity. It is most closely associated with businesses’ financial reporting, but it is also used by people and organizations to assess their own health and performance, as well as honor their tax obligations. It requires a system of full, consistent, and accurate records that can be compared over time. In addition, it is essential to business decision making and for meeting compliance requirements, such as reporting income to the IRS (for public companies) and loan covenants and U.S. Securities and Exchange Commission (SEC) requirements for private and public firms.

Every profit-seeking, commercial organization that has economic resources uses accounting information to manage its resources and meet regulatory or investor demands. Not-for-profit entities such as governments, churches, charities, fraternities, and hospitals use accounting for a variety of purposes, too.

In addition to the recording of transactions and preparing reports, accountants analyze and interpret this data. This analysis helps them make informed decisions for their organization and its stakeholders. For example, accounting allows management teams to understand how their business performs and determine if a new strategy is working. It also helps managers allocate financial resources and makes it possible for a company to decide how much a product should cost. For all of these reasons, it is important for professional accountants to have strong writing skills. Developing those skills can be a challenging aspect of studying accounting, as many students are required to write formal essays, term papers, research papers and reports during their studies.   Buchhaltung