The practice of accounting has many roles in a modern business today.

They a business to accurately determine the profit or loss from doing business given amount of time. This allows a business to accurately determine what and federal income taxes are due annually. Accounting is information that ed by potential investors to decide whether or not to buy stocks and bonds e firm.

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Today accounting practices are standard to ensure compliance to all state and fe deral laws and to avoid fraud. The principles today are referred to as Generally Accepted Accounting Principles (GAAP). Some of the basic accounting principles as taught today include the balance shee t equation of assets = liabilities + stockholder's equity. The source of inform ation for the balance sheet is the income statement which has the formula revenu es - expenses = net income or net loss. The next step in preparing financial sta tements is the statement of retained earnings. The formula for this is retained earnings from previous statements + net income - dividends = ending retained ear nings. Once these financial accounting reports have been done, state and federal taxes can be determined along with a number of other important ratios used by investor s. The current ratio is determined by dividing current assets by current liabili ties. The debt to total assets ratio is determined by dividing total assets by t otal liabilities. All of these reports play a vital role in today's businesses whether they be mul ti-billion dollar corporations or a mom and pop corner store in a small town. No t only do they provide valuable information to potential investors, they give th e owners of the business a snap-shot of the financial health of their business a t any point in time the reports are generated. With today's accounting software, what was once a tedious task that could take days can now be done in a fraction of the time.