Introduction to Accounting

Recording

It involves keeping a chronological diary of events that are measured in pesos. The diary referred to in the definition are the journals and ledgers.

Communicating

It occurs through the preparation and distribution of financial and other accounting reports

The Industrial Revolution (1760-1830)

Mass production and the great importance of fixed assets were given attention during this period

Identifying

This involves selecting economic events that are relevant to a particular business transaction. The economic events of an organization are referred to as transactions.

Accounting

is the process of identifying, recording, and communicating economic events of an organization to interested users.

Nature of Accounting

According to Accounting Theory"Accounting is a systematic recording of financial transactions and the presentation of the related information to appropriate persons."

History of Accounting

Accounting is as old as civilization itself. It has evolved in 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 indistinguishable from the history of finance and business.

14th Century

Double-Entry Bookkeeping The most important event in accounting history is generally considered to be the dissemination of double entry bookkeeping

19th Century

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 Charter to the Institute of Accountants in Glasgow, creating the profession of the Chartered Accountant (CA). In the late 1800s, chartered accountants from Scotland and Britain came to the U.S. to audit British investments. Some of these accountants stayed in the U.S., setting up accounting practices and becoming the origins of several U.S. accounting firms. The first national U.S. accounting society was set up in 1887.

Evolution of Accounting

The Cradle of Civilization Around 3600 B.C., recordkeeping 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

The Present

The Development of Modern Accounting Standards and Commerce The accounting profession in the 20th century developed 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 and Exchange Commission (SEC). As economies worldwide continued to globalize, accounting regulatory bodies required accounting practitioners to observe International Accounting Standards. This is to assure transparency and reliability, and to obtain greater confidence on accounting information used by global investors. Nowadays, investors seek investment opportunities all over the world. To remain competitive, businesses everywhere feel the need to operate globally. The trend now for accounting professionals is to observe one single set of global accounting standards in order to have greater transparency and comparability of financial data across borders

Luca Pacioli

The Father of Accounting

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