Accounting is the process of recording transactions that occur within a business, as well as creating reports for internal and external dissemination based on those transactions. Auditing, on the other hand, is the process of reviewing a business' activities, either as an overall entity or through specific departments.Know More
The transactions covered in accounting include everything from sales and services to purchases and financing activities. All of these transactions are recorded in a series of financial journals, using a set of rules known as generally accepted accounting principles. These rules ensure that account books are standardized across organizations. Once the transactions are recorded for a specified period, a business quarter or year for example, financial reports are created by an accountant that summarize the transactions and present the financial results of business conducted during that period.
Auditing is used generally to improve a company's business methods or to find mistakes that can lead to financial or legal issues. Auditing is closely related to accounting in that it often covers the accounting process to ensure that the accountants for an organization are following the accounting principles. Auditing can also be done on any aspect of the business, checking that actual business activities are following acceptable procedures. During the auditing process, changes can be recommended as well, to make the organization more efficient or profitable.Learn more about Accounting
According to Investopedia, "statutory auditing" is when a company is required by law to ensure that it is being accurate in its accounting. This type of auditing is usually performed by an external organization, notes Crowe Horwarth.Full Answer >
Accrual accounting occurs when a business counts transactions on the books regardless of when they are paid in full, according to Nolo. Transactions are counted when an order is made or goods are received when using the accrual method.Full Answer >
The specific activities of an accountant vary based on employment type; however, accountants generally record financial transactions and prepare reports for employers or clients. Common accounting roles include management accountant, public accountant and government accountant.Full Answer >
Basic payroll record retention for tax purposes requires employers to keep wage information and tax data for employees for at least four years, reports the IRS. The Fair Labor Standards Act requires employers to keep payroll records of employees for at least three years, states the U.S. Department of Labor.Full Answer >