accounting

noun ac·count·ing \ ə-ˈkau̇n-tiŋ \

Updated on: 21 Apr 2018

1 : the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results; also : the principles and procedures of this system

studied accounting as a freshman

2 a : work done in accounting or by accountants

b : an instance of applied accounting or of the settling or presenting of accounts

3 : account 2

They were required to provide a detailed accounting of their actions.

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Examples of accounting in a Sentence

what accounting can you give for your bizarre actions on the night in question?

Recent Examples of accounting from the Web

Izea’s outside accounting firm, BDO USA, reportedly found that the error only meant reporting certain expenses in a different line item.

— paul brinkmann, OrlandoSentinel.com, "Izea: Our accounting error didn’t impact bottom line," 18 Apr. 2018
Dana was hired at PricewaterhouseCoopers, the international accounting firm, and began a job at its midtown office right out of college, often putting in sixteen-hour days.

— junot díaz, The New Yorker, "The Maraschino Mogul’s Secret Life," 17 Apr. 2018
According to the Big Four accounting firm’s study, 61% of C-level executives expect their M&A pipeline to increase over the next year.

— alan murray, Fortune, "Sorrell Out, Shire Slims, Data Monopolies: CEO Daily for April 16, 2018," 16 Apr. 2018
The bride’s father is a partner of Frost, an accounting firm there.

— New York Times, "Whitney Flesher, David Tutor," 15 Apr. 2018
The district paid the IRS $320,000 and paid the accounting firm that negotiated the settlement.

— carole carlson, Post-Tribune, "Gary schools get $3.75 million loan for payroll," 12 Apr. 2018
So Viola the comptroller called in the forensic accounting firm RSM to analyze the situation.

— michael harriot, The Root, "Report Details How Employees Scammed Howard University for Hundreds of Thousands of Dollars," 10 Apr. 2018
What began as a routine internal review of the financial aid office in August 2016 resulted in the hiring of a forensic accounting firm months later, after a consultant grew suspicious about the awarding and distribution of university aid.

— danielle douglas-gabriel, Washington Post, "Howard University reveals that terminated employees misappropriated $369,000," 9 Apr. 2018
For years, the Big Four accounting firms have pushed into consulting, seeking growth their core auditing businesses weren’t providing.

— michael rapoport, WSJ, "How Did the Big Four Auditors Get $17 Billion in Revenue Growth? Not From Auditing," 7 Apr. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'accounting.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of accounting

Middle English acountynge "reckoning, calculation," from gerund of accounten "to ²account"

NEW! Time Traveler

First Known Use: circa 1676

in the meaning defined at sense 2b

See Words from the same year

accounting Synonyms

Synonyms

account, argument, case, explanation, rationale, reason;

appeal, plea;

guise, pretense (or pretence), pretext, rationalization;

Other Business Terms

amortize, caveat emptor, clearinghouse, divest, due diligence, emolument, green-collar, marque, overhead, perquisite

Financial Definition of ACCOUNTING

accounting

noun

What It Is

Accounting is the process of systematically recording, measuring, and communicating information about financial transactions.

How It Works

At the heart of accounting is the double-entry bookkeeping method. This involves making at least two recording entries for every transaction: a debit in one account and a credit in another account. The method helps prevent errors because the sum of the debits should equal the sum of the credits. The three major financial statements produced by accounting are the income statement, the balance sheet, and the cash flow statement.

Accounting can be done on a cash basis (cash accounting) or on an accrual basis (accrual accounting). Cash accounting records cash inflows and outflows in the period in which they occur. Accrual accounting records income and expenses in the period to which they are attributable rather than when cash payments come and go. For example, a check written in April for March's utilities would appear as a March expense under the accrual method and as an April expense under the cash method.

There are two general kinds of accounting. Financial accounting is the recording and communication of economic information in accordance with Generally Accepted Accounting Principles (GAAP) and is primarily for external users. Managerial accounting is the recording and communication of economic information that may or may not be in accordance with GAAP and is for internal users. Other accounting specialty areas exist, such as tax accounting, oil and gas accounting, or forensic accounting.

There are two kinds of users of accounting information: internal users and external users. Internal users are usually company managers who use accounting information to decide how to plan and control operations on a daily and long-term basis. External users are existing or potential investors, creditors, analysts, financial advisers, regulatory authorities, unions, and the general public. They use accounting information to make a myriad of decisions about whether to buy, hold, sell, lend, continue a relationship, or make an agreement.

The Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), the IRS, and other regulatory bodies set accounting standards and requirements for accounting frequency and presentation.

Why It Matters

The definition of accounting on InvestingAnswers. Accounting is tremendously important because it is the language of business, and it is at the root of making informed business decisions. Without accounting, managers would not know which products were successful, which business decisions were the right ones, and whether the company was earning money. It would not know how much to pay in taxes, whether to lease or buy an asset, or whether to merge with another company. In short, accounting doesn't just count the beans, it measures a company's success at meeting its goals and it helps investors understand how efficiently their economic resources are being used. This is why companies must be proficient in accounting in order to make good decisions.

Accounting can be controversial, in that accounting rules and methods are sometimes subject to interpretation or can appear to distort a company's true performance. This is another important reason that effective leaders and managers must thoroughly understand the accounting impact of their decisions.