THE TERM "ACCOUNTING" BY ISU, SMART ELUU

ACCOUNTING

Accounting, or accountancy, is the measurement, processing and communication of financial information about economic entities  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.

Accounting can be divided into several fields including financial accounting, management accounting, auditing, and tax accounting. Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to 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 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).

It is also defined as the systematic and comprehensive recording of financial transactions pertaining to a business. Accounting also refers to the process of summarizing, analyzing and reporting these transactions. The financial statements that summarize a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period. Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with dozens of employees at larger companies.

 Based on nature

An account may be classified as real, personal or as a nominal account

Type	Represent	Examples
Real	Physically tangible things in the real world and certain intangible things not having any physical existence	Tangibles - Plant and Machinery, Furniture and Fixtures, Computers and Information Processing Equipment etc. Intangibles -Goodwill, Patents and Copyrights, Cash Accounts
Personal	Business and Legal Entities, Bank Accounts	Individuals, Partnership Firms, Corporate entities, Non-Profit Organizations, any local or statutory bodies including governments at country, state or local levels
Nominal	Temporary Income and Expenditure Accounts for recognition of the implications of the financial transactions during each fiscal year till finalisation of accounts at the end	Sales, Purchases, Electricity Charges

Example: A sales account is opened for recording the sales of goods or services and at the end of the financial period the total sales are transferred to the revenue statement account (Profit and Loss Account or Income and Expenditure Account).

Similarly expenses during the financial period are recorded using the respective Expense accounts, which are also transferred to the revenue statement account. The net positive or negative balance (profit or loss) of the revenue statement account is transferred to reserves or capital account as the case may be.

Based on periodicity of flow

The classification of accounts into real, personal and nominal is based on their nature i.e. physical asset, liability, juristic entity or financial transaction.

The further classification of accounts is based on the periodicity of their inflows or outflows in the context of the fiscal year.

Income is immediate inflow during the fiscal year.

Expense is the immediate outflow during the fiscal year.

An asset is a long-term inflow with implications extending beyond the financial period and by the traditional view could represent unclaimed income. Alternatively, an asset could be valued at the present value of its future inflows.

Liability is long term outflow with implications extending beyond the financial period and by the traditional view could represent unamortised expense. Alternatively, a liability could be valued at the present value of future outflows.

Type of accounts	Long term inflows	Long term outflows	Short term inflows	Short term outflows
Real accounts	Assets
Personal accounts	Assets	Liability
Nominal accounts			Incomes	Expenses

Items in accounts are classified into five broad groups, also known as the elements of the accounts:^[2] Asset, Liability, Equity, Revenue, Expense.

The classification of Equity as a distinctive element for classification of accounts is disputable on account of the "Entity concept", since for the objective analysis of the financial results of any entity the external liabilities of the entity should not be distinguished from any contribution by the shareholders.

Auditing is the verification of assertions made by others regarding a payoff,^[31] and in the context of accounting it is the "unbiased examination and evaluation of the financial statements of an organization".

An audit of financial statements aims to express or disclaim an opinion on the financial statements. The auditor expresses an opinion on the fairness with which the financial statements presents the financial position, results of operations, and cash flows of an entity, in accordance with GAAP and "in all material respects". An auditor is also required to identify circumstances in which GAAP has not been consistently observed.

Banking software is enterprise software that is used by the banking industry. Typically banking software refers to Core Banking Software and its interfaces that allows commercial banks to connect to other modular software and to the interbank networks. It can also refer to the trading software used by investment banks to access capital markets.

Banking: Commercial or retail banks use what is known as core banking software which record and manage the transactions made by the banks customers to their accounts. For example it allows a customer to go to any branch of the bank and do its banking from there. In essence, it frees the customer from his home branch and enables him to do banking anywhere. Further, the bank's databases can be connected to other channels such as ATMs, Internet Banking and SMS based banking.

Banking software is used by millions of users across hundreds's or thousands of branches. This means that the software must be managed on many machines even in a small bank. The core banking system is a major investment for a retail banks and maintaining and managing the system can represent a large part of the cost of running a bank.