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Accounting is a systematic procedure for recording, reporting and analyzing the financial funds either received or paid by a business. The information is compiled into financial statements that are provided to decision makers. Keeping a report of accounting helps businesses make accurate financial decisions.

In the business sector, accounting is used to report financial information about the business to various groups. This reporting typically occurs in two different categories. The first category is management accounting, which concentrates reporting efforts to internal groups.

These groups may include managers, employees, shareholders and auditors. Management accounting helps these groups make operation and management decisions.

The second category is financial accounting, which provides financial information to external groups associated with the business. These groups may include creditors, potential investors, banking institutions, vendors, government agencies and economists. Generally, reporting of financial accounting is a structured process that must follow more rules not necessary for management accounting.

As a professional practice, accounting has several guiding principles. These principles usually determine how and what type of information is provided. Following rules and regulations known as Generally Accepted Accounting Principles (GAAP), accounting records provide a snapshot of a business's financial performance.

Accountant is the formal job title for a person who is responsible for accounting records. Using GAAP, accountants are expected to conduct the following as it pertains to financial records:

• Help executive management make informed decisions based on the information provided.
• Submit reports to stakeholders such as employees, investors and creditors about the financial health of the business.
• Ensure financial laws are followed.
• Verify the accuracy of reports and records within the business.
• Identify areas where efficiency can be maximized towards business success. This may include investments from cash reserves and cutting unnecessary costs.
• Protect the business from embezzlement, fraud and wasteful activities that cost the business money.