Intercompany accounting can be defined as the record-keeping and reporting of financial transactions between two or more related businesses. It involves tracking the flow of money and other assets, such as inventory and services, between entities in order to ensure accurate reporting and compliance with applicable laws. Intercompany accounting is an integral part of the overall financial system, as it helps businesses to identify potential issues and make informed decisions. By accurately recording intercompany transactions, businesses are able to maintain financial integrity and transparency, while also avoiding costly legal action.