Accountancy is the art of communicating financial information about a business entity A business is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies. Most businesses are privately owned. A business is typically formed to earn profit that will increase the wealth of its owners and grow the business itself. The owners and operators of a to users such as shareholders A mutual shareholder or stockholder is an individual or company that legally owns one or more shares of stock in a joint stock company. A company's shareholders collectively own that company and are the members of the company by signing the memorandum of association . Thus, the typical goal of such companies is to enhance shareholder value and managers Management in all business areas and organizational activities are the acts of getting people together to accomplish desired goals and objectives efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization or effort for the purpose of accomplishing a goal. Resourcing.[1] The communication Communication is a process whereby information is enclosed in a package and is channeled and imparted by a sender to a receiver via some medium. The receiver then decodes the message and gives the sender a feedback. All forms of communication require a sender, a message, and an intended recipient, however the receiver need not be present or aware is generally in the financial´s form statements that show in money terms the economic resources In economics, factors of production are the resources employed to produce goods and services. They facilitate production but do not become part of the product (as with raw materials) or become significantly transformed by the production process (as with fuel used to power machinery). To 19th century economists, the factors of production were land ( under the control of management; the art lies in selecting the information that is relevant to the user and is reliable.[2]
Accountancy is a branch of mathematical science Mathematical sciences is a broad term that refers to those academic disciplines that are primarily mathematical in nature but may not be universally considered subfields of mathematics proper. Statistics, for example, is mathematical in its methods but grew out of political arithmetic which merged with inverse probability and grew through that is useful in discovering the causes of success and failure in business A business is a legally recognized organization designed to provide goods or services, or both, to consumers, businesses and governmental entities. Businesses are predominant in capitalist economies. Most businesses are privately owned. A business is typically formed to earn profit that will increase the wealth of its owners and grow the business.The principles The scientific process generally consists of establishing a cause by analyzing its effect upon objects. In this way, a description can be established to explain what principle brought about the change-effect. For this reason the principle of cause is considered to be a determining factor in the production of facts of accountancy are applied to business entities in three divisions of practical art, named accounting, bookkeeping, and auditing The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, and for energy conservation.[3]
Accounting is defined by the American Institute of Certified Public Accountants The American Institute of Certified Public Accountants is the national, professional association of Certified Public Accountants (CPAs) in the United States, with more than 360,000 members, including CPAs in business and industry, public practice, government, and education; student affiliates; and international associates. The AICPA maintains (AICPA) as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof."[4]
Accounting is thousands of years old; the earliest accounting records, which date back more than 7,000 years, were found in the Middle East. The people of that time relied on primitive accounting methods to record the growth of crops and herds. Accounting evolved, improving over the years and advancing as business advanced.[5]
Early accounts served mainly to assist the memory of the businessperson A businessperson is employed at usually a profit-oriented enterprise, or more specifically, someone who is involved in the management (at any level) of a company, or even an entrepreneur. The term businessperson almost always refers to someone with a "white collar" occupation and the audience for the account was the proprietor A sole proprietorship also known as a sole trader, or simply proprietorship is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business. All profits and all losses accrue to the owner . All assets of the business are owned by the proprietor and all debts of the or record keeper alone. Cruder forms of accounting were inadequate for the problems created by a business entity involving multiple investors The term has taken on a specific meaning in finance to describe the particular types of people and companies that regularly purchase equity or debt securities for financial gain in exchange for funding an expanding company. Less frequently, the term is applied to parties who purchase real estate, currency, commodity derivatives, personal property, so double-entry bookkeeping The double-entry bookkeeping system was started in 13th century and refers to a set of rules to record financial information in a financial accounting system wherein every transaction or event impacts at least two different accounts. In modern accounting this is done using debits and credits within the accounting equation, assets = liabilities + first emerged in northern Italy in the 14th century, where trading ventures began to require more capital Financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc than a single individual was able to invest. The development of joint stock companies A joint stock company is a type of business entity: it is a type of corporation or partnership involving two or more legal persons. Certificates of ownership (or stocks) are issued by the company in return for each financial contribution, and the shareholders are free to transfer their ownership interest at any time by selling their stockholding created wider audiences for accounts, as investors without firsthand knowledge of their operations Business operations are those ongoing recurring activities involved in the running of a business for the purpose of producing value for the stakeholders. They are contrasted with project management, and consist of business processes relied on accounts to provide the requisite information.[6] This development resulted in a split of accounting systems for internal (i.e. management accounting Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions) and external (i.e. financial accounting Financial accountancy is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power) purposes, and subsequently also in accounting and disclosure regulations and a growing need for independent attestation Accounting attestation standards define the basic standards for representing attestation engagements. Attestation is defined as an engagement in which a practitioner is hired to issue written communication that expresses a conclusion about the reliability of written assertions prepared by a separate party. The American Institute of Certified of external accounts by auditors The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, and for energy conservation.[7]
Today, accounting is called "the language of business" because it is the vehicle for reporting financial information about a business entity to many different groups of people. Accounting that concentrates on reporting to people inside the business entity is called management accounting Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions and is used to provide information to employees, managers, owner-managers Self-employment is working for one's self rather than for another person or company. In other sense, it is, earning one's livelihood directly from one's own trade or business rather than as an employee of another. To be self-employed, an individual is normally highly skilled in a trade or has a niche product or service for his or her local and auditors The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, and for energy conservation. Management accounting is concerned primarily with providing a basis for making management or operating decisions. Accounting that provides information to people outside the business entity is called financial accounting Financial accountancy is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power and provides information to present and potential shareholders, creditors A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption (usually enforced by contract) that the second party will return an equivalent property or service. The second such as banks or vendors, financial analysts A financial analyst, securities analyst, research analyst, equity analyst, or investment analyst is a person who performs financial analysis for external or internal clients as a core part of the job, economists An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this field there are many sub-fields, ranging from the broad philosophical theories to the focused study of minutiae within specific markets,, and government agencies A government agency is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions, such as an intelligence agency[citation needed]. There is a notable variety of types of agency. Although usage differs, a government agency is normally distinct both from a. Because these users have different needs, the presentation of financial accounts is very structured and subject to many more rules than management accounting. The body of rules that governs financial accounting is called Generally Accepted Accounting Principles Generally Accepted Accounting Principles is the americanized term used to refer to the standard framework of guidelines for financial accounting used in any given jurisdiction which are generally known as Accounting Standards. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in, or GAAP.[8]
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Etymology
The word "Accountant An accountant is a practitioner of accountancy , which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and other decision makers make resource allocation decisions" is derived from the French word Compter, which took its origin from the Latin Latin or sometimes Roman is an Italic language originally spoken in Latium and Ancient Rome. Although often considered a dead language, in view of the fact that it has no native speakers, a small number of scholars can fluently speak it and it continues to be taught in schools and universities and has been, and currently is, used in the process of word Computare. The word was formerly written in English as "Accomptant", but in process of time the word, which was always pronounced by dropping the "p", became gradually changed both in pronunciation Pronunciation refers to the way a word or a language is spoken, or the manner in which someone utters a word. If one is said to have "correct pronunciation", then it refers to both within a particular dialect and in orthography The orthography of a language specifies a standardized way of using a specific writing system to write the language. Where more than one writing system is used for a language, for example Kurdish, Uyghur or Serbian, there can be more than one orthography. Orthography is distinct from typography to its present form.[9]
History
Token accounting in ancient Mesopotamia
Map of the Middle East showing the Fertile Cresent circa. 3rd millennium BC It represents a period of time in which imperialism, or the desire to conquer, grew to prominence, in the city states of the Middle East, but also throughout Eurasia, with Indo-European expansion to Anatolia, Europe and Central Asia. The civilization of Ancient Egypt rises to a peak with the Old Kingdom. World population is estimated to haveThe earliest accounting records were found amongst the ruins of ancient Babylon Babylon was a city-state of ancient Mesopotamia, the remains of which are found in present-day Al Hillah, Babil Province, Iraq, about 85 kilometers (55 mi) south of Baghdad. All that remains of the original ancient famed city of Babylon today is a mound, or tell, of broken mud-brick buildings and debris in the fertile Mesopotamian plain between, Assyria Assyria was a kingdom centered on the Upper Tigris river, in Mesopotamia , that came to rule regional empires a number of times through history. It was named for its original capital, the ancient city of Assur (Akkadian: 𒀸𒋗𒁺 𐎹 Aššūrāyu; Arabic: أشور Aššûr; Hebrew: אַשּׁוּר Aššûr, Aramaic: ܐܬܘܪ Aṯur. The term and Sumeria Sumer was a civilization and historical region in southern Mesopotamia, modern Iraq. It is the earliest known civilization in the world and is known as the Cradle of Civilization. The Sumerian civilization spanned over 3000 years and began with the first settlement of Eridu in the Ubaid period (mid 6th millennium BC) through the Uruk period (4th, which date back more than 7,000 years. The people of that time relied on primitive accounting methods to record the growth of crops and herds. Because there is a natural season to farming and herding, it is easy to count and determine if a surplus The term surplus is used in economics for several related quantities. The consumer surplus is the amount that consumers benefit by being able to purchase a product for a price that is less than the most that they would be willing to pay. The producer surplus is the amount that producers benefit by selling at a market price mechanism that is higher had been gained after the crops had been harvested or the young animals weaned.[5]
Accounting tokens made of clay, from Susa Susa (Persian: Ŝuŝ, pronounced [ʃuʃ]; also Armenian ; Greek: Σοῦσα [sousa]); Syriac: ܫܘܫ (Shush); Old Persian Çūšā-; Biblical Hebrew שׁוּשָׁן (Shushān); was an ancient city of the Elamite, Persian and Parthian empires of Iran. It is located in the lower Zagros Mountains about 250 km (150 miles) east of the Tigris River,, Uruk period The Uruk period existed from the protohistoric Chalcolithic to Early Bronze Age period in the history of Mesopotamia, following the Ubaid period and succeeded by the Jemdet Nasr period. Named after the Sumerian city of Uruk, this period saw the emergence of urban life in Mesopotamia. It was followed by the Sumerian civilization. The late Uruk, cira 3500 BCE. Department of Oriental Antiquities, Louvre The Musée du Louvre , or officially Grand Louvre — in English the Louvre Museum or simply the Louvre — is one of the world's largest museums, the most visited art museum in the world and a historic monument. It is a central landmark of Paris and located on the Right Bank of the Seine in the 1st arrondissement (district). Nearly 35,000 objects.During the period 8000 In the 8th millennium BC, agriculture becomes widely practiced in the Fertile Crescent and Anatolia–3700 Categories: 37th century BC | 4th millennium BC | Centuries | BCE Common Era, abbreviated as CE, is one of the designations for the world's most commonly used year-numbering system. The numbering of years using Common Era notation is identical to the numbering used with Anno Domini notation, 2010 being the current year in both notations and neither using a year zero. Common Era is also known as Christian Era and, the Fertile Crescent The Fertile Crescent is a region in Western Asia. It includes the comparatively fertile regions of Mesopotamia and the Levant, delimited by the dry climate of the Syrian Desert to the south and the Anatolian highlands to the north. The region is often considered the cradle of civilization, saw the development of many of the earliest human witnessed the spread of small settlements supported by agricultural surplus. Tokens, shaped into simple geometric Geometry "Earth-measuring" is a part of mathematics concerned with questions of size, shape, relative position of figures, and the properties of space. Geometry is one of the oldest sciences. Initially a body of practical knowledge concerning lengths, areas, and volumes, in the 3rd century BC geometry was put into an axiomatic form by forms such as cones A cone is a three-dimensional geometric shape that tapers smoothly from a flat, usually circular base to a point called the apex or vertex. More precisely, it is the solid figure bounded by a plane base and the surface formed by the locus of all straight line segments joining the apex to the perimeter of the base. The term "cone" or spheres A sphere is an object shaped like a ball and can also be used to refer to a sphere-like region or shell, were used for stewardship Historically, stewardship was the responsibility given to household servants to bring food and drinks to a castle dining hall. The term was then expanded to indicate a household employee's responsibility for managing household or domestic affairs.[nb 1] Stewardship later became the responsibility for taking care of passengers' domestic needs on a purposes in relation to identifying and securing this surplus, and are examples of accounts that referred to lists of personal property.[10] Some of them bore markings in the form of incised lines and impressed dots. Neolithic community leaders collected the surplus at regular intervals in the form of a share of the farmers’ flocks and harvests. In turn, the accumulated communal goods were redistributed to those who could not support themselves, but the greatest part was earmarked for the performance of religious rituals and festivals. In 7000 BCE, there were only some 10 token shapes because the system exclusively recorded agricultural goods, each representing one of the farm products levied at the time, such as grain, oil and domesticated animals.The number of token shapes increased to about 350 around 3500 BCE, when urban workshops started contributing to the redistribution economy. Some of the new tokens stood for raw materials such as wool and metal and others for finished products among which textiles, garments, jewelry, bread, beer and honey.[11]
The invention of a form of bookkeeping using clay tokens represented a huge cognitive leap for mankind.[12] The cognitive significance of the token system was to foster the manipulation of data. Compared to oral information passed on from one individual to the other, tokens were extra-somatic, that is outside the human mind. As a result, the Neolithic accountants were no longer the passive recipients of someone else's knowledge, but they took an active part in encoding and decoding data. The token system substituted miniature counters for the real goods, which eliminated their bulk and weight and allowed dealing with them in abstraction by patterning, the presentation of data in particular configurations. As a result, heavy baskets of grains and animals difficult to control could be easily counted and recounted. The accountants could add, subtract, multiply and divide by manually moving and removing counters.[13]
Globular token envelope with a cluster of accounting tokens. Clay, Susa, Uruk period (4000 to 3100 BCE). Department of Oriental Antiquities, Louvre. Economic tablet with numeric signs. Proto-Elamite script in clay, Susa, Uruk period (3200 BC to 2700 BCE). Department of Oriental Antiquities, Louvre.The Mesopotamian civilization emerged during the period 3700–2900 BCE amid the development of technological innovations such as the plough, sailing boats and copper metal working. Clay tablets with pictographic characters appeared in this period to record commercial transactions performed by the temples.[10] Clay receptacles known as bullae (Latin: 'Bubble'), were used in Elamite city of Susa which contained tokens. These receptacles were spherical in shape and acted as envelopes, on which the seal of the individuals taking part in a transaction were engraved. The symbols of the tokens they contained were represented graphically on their surface, and the recipient of the goods could check whether they matched with the amount and characteristics expressed on the bulla once they had received and inspected them. The fact that the content of bulla was marked on its surface produced a simple way of checking without destroying the receptacle, which constituted in itself an exercise in writing that, despite being born spontaneously as a support for the existing system for controlling merchant goods, ultimately became the definitive practice for non-oral communication. Eventually, bullae were replaced by clay tablets, which used symbols to represent the tokens.[14]
During the Sumerian period, token envelop accounting was replaced by flat clay tablets impressed by tokens that merely transferred symbols. Such documents were kept by scribes, who were carefully trained to acquire the necessary literary and arithmetic skills and were held responsible for documenting financial transactions.[15] Such records preceded the earliest found examples of cuneiform writing in the form of abstract signs incised in clay tablets, which were written in Sumerian by 2900 BCE in Jemdet Nasr. Therefore "token envelop accounting" not only preceded the written word but constituted the major impetus in the creation of writing and abstract counting.[10]
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BBC News An internal audit report into the running of one of Leicester's biggest entertainment venues has found accounting and management failures. ...
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Credits are companies, defined as the amount by companies from other business entities, or they are individuals. Some debts from credit sales are not.
