History and Etymology of Accounting
– Accounting is thousands of years old and can be traced back to ancient civilizations.
– Early developments of accounting can be found in ancient Mesopotamia, Iran, Egypt, and Babylon.
– The Roman government had access to detailed financial information during the time of Emperor Augustus.
– Double-entry bookkeeping was pioneered in the Jewish community of the early-medieval Middle East and further refined in medieval Europe.
– Luca Pacioli published the first work on a double-entry bookkeeping system in 1494.
– The words ‘accounting’ and ‘accountancy’ were in use in Great Britain by the mid-1800s.
– The word ‘account’ in Middle English was derived from the Old French word ‘aconter’ and the Vulgar Latin word ‘computare.’
– The word ‘accountant’ is derived from the French word ‘compter,’ which is also derived from the Italian and Latin word ‘computare.’
– The word ‘accountant’ was formerly written as ‘accomptant’ and gradually changed in pronunciation and orthography over time.
– ‘Accountancy’ refers to the occupation or profession of an accountant, particularly in British English.
Terminology and Principles of Accounting
– Accounting involves keeping or preparing financial records, analyzing and verifying records, and reporting principles and procedures.
– Accountancy refers to the occupation or profession of an accountant.
– Terminology in accounting includes terms such as financial records, analysis, verification, reporting, and principles.
– The job of an accountant involves the tasks related to accounting.
– Accounting principles and procedures guide the practice of accounting.
Subfields of Accounting
– Accounting has several subfields or subject areas, including financial accounting, management accounting, auditing, taxation, and accounting information systems.
– Financial accounting focuses on reporting an organization’s financial information to external users, such as investors and creditors.
– Management accounting focuses on providing information for internal use by managers in decision-making.
– Auditing involves the verification and evaluation of an organization’s financial statements.
– Taxation in accounting deals with the calculation and reporting of taxes.
Specialized Areas of Accounting
– Accounting information system is a part of an organization’s information system used for processing accounting data.
– Tax accounting in the United States focuses on the preparation, analysis, and presentation of tax payments and returns.
– Forensic accounting is a specialty practice area of accounting that involves engagements resulting from disputes or litigation.
– Political campaign accounting involves the development and implementation of financial systems for political campaign operations.
– Professional accounting bodies include the American Institute of Certified Public Accountants (AICPA) and the International Federation of Accountants (IFAC).
Research, Scandals, and Fraud
– Accounting research examines the effects of economic events on accounting processes and the impact of reported information on economic events.
– Scandals involving companies like Enron and WorldCom highlighted the need for reviewing accounting standards and regulations.
– Accounting fraud involves intentional misstatements or omissions in accounting records, while accounting errors are unintentional misstatements or omissions.
– The primary responsibility for preventing and detecting fraud and errors lies with the entity’s management.
– Accurate accounting records are essential for financial reporting and decision-making. Source: https://en.wikipedia.org/wiki/Accountancy
Accounting, also known as accountancy, is the processing of information about economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators. Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used interchangeably.
Accounting can be divided into several fields including financial accounting, management accounting, tax accounting and cost accounting. Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers. Management accounting focuses on the measurement, analysis and reporting of information for internal use by management. The recording of financial transactions, so that summaries of the financials may be presented in financial reports, is known as bookkeeping, of which double-entry bookkeeping is the most common system. Accounting information systems are designed to support accounting functions and related activities.
Accounting has existed in various forms and levels of sophistication throughout human history. The double-entry accounting system in use today was developed in medieval Europe, particularly in Venice, and is usually attributed to the Italian mathematician and Franciscan friar Luca Pacioli. Today, accounting is facilitated by accounting organizations such as standard-setters, accounting firms and professional bodies. Financial statements are usually audited by accounting firms, and are prepared in accordance with generally accepted accounting principles (GAAP). GAAP is set by various standard-setting organizations such as the Financial Accounting Standards Board (FASB) in the United States and the Financial Reporting Council in the United Kingdom. As of 2012, "all major economies" have plans to converge towards or adopt the International Financial Reporting Standards (IFRS).
