Accountancy – What is accountancy?

Definition: The actual recording and summarizing of financial transactions is known as bookkeeping. When the data is produced and abstracted in reports for the use of persons outside the organization, the process is called financial accounting.

Accountancy makes use of the information provided by bookkeeping to classify measure, explain and communicate accounting information to those who need to understand the financial position of the business.

The use of this information also makes it possible to forecast for the future, analyse all areas of the business and evaluate the business’ potential.

Reports

Three reports are typically generated in financial accounting: the balance sheet, which summarizes the firm’s assets and liabilities; the income statement, which reports the firm’s gross proceeds, expenses, and profit or loss; and the statement of cash flow, which analyzes the flow of cash into and out of the firm.

The creation of reports (usually monthly) for internal planning and decision-making is called management accounting.

It's aim is to provide managers with reliable information on the costs of operations and on standards with which those costs can be compared, to assist them in budgeting.