Every company must perform some accounting. This is so as to identify its financial state. Also known as bookkeeping, accounting involves the collection, analysis, classification, verification, interpretation and presentation of financial information. There are various types of bookkeeping. One of these is corporate accounting. It is especially suited for companies. Corporate accounting deals with processes such as the preparation of cash flow statements, financial records, balance sheets and more. It can be used to handle unique corporate business processes such as absorption, amalgamation and the creation of consolidated documents. Here is more about this type of accounting.
The Definition of Corporate Accounting
This is a process of accounting that is dedicated to the operations of a single company. In this type of bookkeeping, the corporate accountant only concerns themselves with the financial records of one firm. More specifically, the accountant only focuses on the firm that has employed him or her. According to the corporate accounting definition, this activity is normally performed so as to ascertain the financial and operational status of a company. Investors are especially interested in knowing the financial strength of the firm in which they have purchased some stock. Therefore, corporate accounting is performed to communicate the assets and liabilities of the firm to them.
This type of accounting is also performed so as to ensure that the financial activities of a company comply with the laws and regulations stipulated by oversight bodies. It also ensures that the business activities stay in tune with organizational policies. Corporate accountants usually perform much of their work internally. They generate reports that are used by management to make strategic decisions for the company.
Accounting or accountancy is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the “language of business”, measures the results of an organization’s economic activities and conveys this information to a variety of users, including investors, creditors, management, and regulators. Practitioners of accounting are known as accountants. The terms “accounting” and “financial reporting” are often used as synonyms.
Accounting can be divided into several fields including financial accounting, management accounting, external auditing, tax accounting and cost accounting. Accounting information systems are designed to support accounting functions and related activities. Financial accounting focuses on the reporting of an organization’s financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers; and management accounting focuses on the measurement, analysis and reporting of information for internal use by management. The recording of financial transactions, so that summaries of the financials may be presented in financial reports, is known as bookkeeping, of which double-entry bookkeeping is the most common system.
Accounting has existed in various forms and levels of sophistication throughout human history. The double-entry accounting system in use today was developed in medieval Europe, particularly in Venice, and is usually attributed to the Italian mathematician and Franciscan friar Luca Pacioli. Today, accounting is facilitated by accounting organizations such as standard-setters, accounting firms and professional bodies. Financial statements are usually audited by accounting firms, and are prepared in accordance with generally accepted accounting principles (GAAP). GAAP is set by various standard-setting organizations such as the Financial Accounting Standards Board (FASB) in the United States and the Financial Reporting Council in the United Kingdom. As of 2012, “all major economies” have plans to converge towards or adopt the International Financial Reporting Standards (IFRS).