Accounting is the process of measuring, processing, and sharing financial and other information about businesses and corporations. It is a necessary function for decision making, cost planning, and measurement of economic performance, regardless of the size of a business. Accounting can be divided into several fields including financial accounting, management accounting, tax accounting, and cost accounting.
An account is a record in an accounting system that tracks the financial activities of a specific asset, liability, equity, revenue, or expense. Each individual account is stored in the general ledger and used to prepare the financial statements at the end of an accounting period. For example, companies will have a Cash account in which to record every transaction that increases or decreases the companys cash. Another account, Sales, will collect all of the amounts from the sale of merchandise. Most accounting systems require that every transaction will affect two or more accounts.
In summary, accounting is the process of recording, classifying, and summarizing financial transactions, while an account is a record in an accounting system that tracks the financial activities of a specific asset, liability, equity, revenue, or expense.
