This document provides an introduction to accounting. It defines accounting as identifying, recording, and communicating the economic events of an organization. It discusses the nature of accounting as a systematic process, service activity, and information system dealing with financial transactions. The document outlines the functions of accounting in business, such as providing information for managers and allowing owners to assess business efficiency. It then provides a brief history of accounting from ancient civilizations to the modern development of standards and global commerce.
2. INTRODUCTION TO ACCOUTING
ACCOUNTING IS THE PROCESS OF IDENTIFYING,RECORDING AND
COMMUNICATING ECONOMIC EVENTS OF AN ORGANIZATION TO INTEREST
USERS
3. WHAT IS IDENTIFYING,RECORDING AND
COMUNUCATING
• IDENTIFYING-THIS INVOLVES SELECTING ECONOMIC EVENTS RELATED TO A
P0ARTICULAR BUSINESS TRANSACTION AND THE ECONOMIC EVENTS OF AN
ORGANIZATION ARE REFFERED TO AS TRANSACTION.
• RECORDING-THIS INVOLVES KEEPING A CHRONOLLOGICAL DAIRY OF EVENTS
THAT ARE MEASURED IN PESOS.THE DIARY REFERRED IN THE DEFINITION ARE
THE JOURNALS AND LEDGER WHICH WILL BE DISCUSSED IN FUTURE MODULES.
• COMMUNICATING-OCCURS THROUGH THE PREPARATION AND DISTRIBUTION
OF FINANCIAL AND THE OTHER ACCOUNTING REPORTS.
4. NATURE OF ACCOUNTING
• ACCOUNTING IS A SYSTEMATIC RECORDING OF FINANCIAL TRANSACTIONS AND
TGE PRESENTATION OF THE RELATED INFORMATION TO APPROPRIATE
PERSONS.
• ACCOUNTING IS A SERVICE ACTIVITY
• ACCOUNTING IS A PROCESS
• ACCOUNTING IS BOTH AN ART AND A DISCIPLINE
• ACCOUNTING DEALS WITH FINANCIAL INFORMATION AND TRANSACTIONS
• ACCOUNTING IS AN INFORMATION SYSTEM
5. FUNCTIONS OF ACCOUNTING IN BUSINESS
ACCOUNTING IS MEANS BY WHICH BUSINESS INFORMATION IS
COMMUNICATED TO BUSINESS OWNERS AND STAKEHOLDERS.THE ROLE OF
ACCOUNTING IN BUSINESS ARE:
TO PROVIDE INFORMATION FOR MANAGER AND OWNERS TO USE IN OPERATING THE
BUSINESS
ALLOWS BUSINESS OWNERS TO ASESS THE EFFICIENCY AND EFFECTIVENESS OF THEIR
BUSINESS OPERATIONS
PREPSRED ACCOUNTING REPORTS CAN BE COMPARED WITH INDUSTRY STANDARDS
OR TO A LEADING COMPETIOR TO DETERMINE HOW THE BUSINESS IS DOING
BUSINESS OWNERS MAY ALSO USE HISTORICAL FINANCIAL ACCOUNTING STATEMENTS
TO CREATE TRENDS FOR ANALYZING AND FORECASTING FUTURE SALES.
6. HISTORY OF ACCOUNTING
ACCOUNTING IS AS OLD AS CIVILIZATION ITSELF.IT HAS
EVOLVED IN THE RESPONSE TO VARIOUS SOCIAL AND
ECONOMIC NEEDS OF MEN.ACCOUNTING STARTED AS A
SIMPLE RECORDING OF REPETITIVE EXCHANGES.THE
HISTORY OF ACCOUNTING IS OFTEN SEEN AS A
DISTINGUISHABLE FROM THE HISTORY OF FINANCE AND
BUSINESS
7. EVOLUTION OF ACCOUNTING
THE CRADLE OF CIVILIZATION
Around 3600 b.c record keeping
was already common from
Mesopotamia,China and India to
Central and South America.The oldest
evidence of this practice was the “clay
tablet”of Mesopotamia which dealt
with commercial transactions at the
time such as listing of accounts
receivable and accounts payable.
14th CENTURY-DOUBLE-ENTRY BOOKEEPING
The most important in accounting history is
generally considerd to be the dissemination of
double entry bookkeeping bt Luca Pacioli(The
Farher of Accounting) in the 14th century
Italy.Pacioli was much revered in his day,and was a
friend and contemporary of Leonardo da Vinci.The
Italians of the 14th to 16th centuries are widely
acknowledged as the father of modern accounting
and Luca Pacioli wrote Summa de Arithmetica,the
first book published that contained a detailed
chapter on double-entry bookeeping
9. ACCOUNTING HISTORY
FRENCH REVOLUTION(1700s)
The thorough study of
accounting and development of
accounting theory began during
this period.Social upheavals
affecting
government,finances,laws
customs and business had greatly
influenced the development of
accounting
THE INDUSTRIAL REVOLUTION(1760-
1830)
Most production and the
great importance of fixed
assests were given
attention during this period
10. 19thcentury-the beginnings of modern accounting in Europe and
america
• The modern formal accounting profession emerged in Scotland in
1854 when Queen Victoria granted a Royal chapter to the institute of
accounting. In 1800s ,charted accounts stayed in the U.S
accountants from Scotland and Britain came to the U.S to audit British
investments.
• The first national U.S accounting society was set up in 1887 (The
American Association of Public Accountants ) was forerunner to the
current American Institute of Certified Public Accountants(AICPA)
11. THE PRESENT-THE DEVELOPMENT OF MODERN
ACCOUNTING STANDARDS AND COMMERCE
• The Accounting profession in the 20th century develop around state
requirements for financial statement audits. Beyond the industry’s self-
regulation, the government also sets accounting standards, through laws
and agencies such as the Securities Commission(SEC).As economics
worldwide continued to globalize.
• Nowadays, ivestors seek investment opportunities .To remain cpmpetitive,
businesses everywhere feel the need to operate globally.
