Accounting

Accounting is the systematic recording, classification, and reporting of financial transactions and positions. It produces information used to assess organizations, make decisions, and meet legal obligations.

Double-entry bookkeeping: A bookkeeping system that records each transaction with equal debit and credit entries. Its balancing entries underpin most modern financial accounting.
Source document: A record that provides evidence of a business transaction, such as an invoice or receipt. It supplies the evidence from which an accounting entry is made.
Management accounting: The use of financial and nonfinancial information to support internal planning, control, and decisions. It adapts accounting data to managers’ operational and strategic choices.
Cash-basis accounting: An accounting basis that records revenue and expense when cash is received or paid. It differs from accrual accounting in when transactions enter the reports.
Enron scandal: A corporate fraud scandal that led to Enron’s 2001 bankruptcy and the dissolution of its auditor, Arthur Andersen. It exposed how misleading reporting and failed oversight can undermine confidence.
Chart of accounts: An organized list of accounts used to classify an entity’s financial transactions. It determines how transactions are grouped in the ledger and reports.
Journal entry: A dated record of a transaction that identifies affected accounts and debit and credit amounts. It translates source evidence into the formal accounting system.
Cost accounting: The measurement and analysis of costs associated with products, services, and activities. It helps organizations understand production costs and evaluate efficiency.
Financial accounting: The preparation of financial information primarily for external users such as investors and lenders. It contrasts with management accounting’s internal decision-making focus.
Sarbanes–Oxley Act: A 2002 U.S. federal law that strengthened public-company reporting, internal controls, and auditor oversight. It imposed reforms in response to major financial reporting scandals.

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