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Accounting is the process of recording and tracking financial statements to see the financial health of an entity. This is done by inputting, sorting, measuring, and then communicating transactions in various formats. Accounting consists of bookkeeping and analysis. Bookkeeping, or financial accounting, consists of recording transactions, which can include purchases, sales, and receipts of an individual or an organization. Once the bookkeeper records and organizes all of the transactions, the next step of accounting is to analyze these transactions into helpful reports which will show the state of one’s finances.

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