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Accountancy. From Wikipedia, the free encyclopedia. Accountancy1 or accounting is the system of recording, verifying, and reporting of the value of assets, liabilities, income, and expenses in the books of account ledger to which debit and credit entries recognizing transactions are chronologically posted to record changes in value see bookkeeping. Such financial information is primarily used by lenders, managers, investors, tax authorities and other decision makers to make resource allocation decisions between and within companies, organizations, and public agencies. Accounting has been defined by the 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. Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarised, interpreted, and communicated for public companies, this information is generally publicly accessible. By contrast management accounting information is used within an organization and is usually confidential and accessible only to a small group, mostly decision makers. Open book Accounting aims to improve accounting transparency. Tax Accounting is the accounting needed to comply with jurisdictional tax regulations. Accounting scholarship is the academic discipline which studies the theory of accountancy. Practitioners of accountancy are known as accountants. Professional bodies for accountants allow their members to use titles indicating their membership or qualification level Chartered Certified Accountant ACCA or FCCA, Chartered Accountant FCA, CA or ACA, International Accountant FAIA or AAIA, Management Accountant ACMA, FCMA or AICWA, Certified Public Accountant CPA and Certified General Accountant CGA or FCGA. The related, but separate financial audit comprises internal and external audit. External audit carried out by independent auditors examines the financial statements and accounting records in order to express an opinion as to the truth and fairness and adherence to Generally Accepted Accounting Principles GAAP, or International Financial Reporting Standards IFRS. Internal audit aims at providing information for management usage, and is typically carried out by employees. Modern accounting. Accounting is the process of identifying, measuring and communicating economic information so a user of the information may make informed economic judgments and decisions based on it. Accounting is the degree of measurement of financial transactions which are transfers of legal property rights made under contractual relationships. Non financial transactions are specifically excluded due to conservatism and materiality principles. At the heart of modern financial accounting is the double entry bookkeeping system. This system involves making at least two entries for every transaction a debit in one account, and a corresponding credit in another account. The sum of all debits should always equal the sum of all credits, providing a simple way to check for errors. This system was first used in medieval Europe, although claims have been made that the system dates back to Ancient Rome or Greece. According to critics of standard accounting practices, it has changed little since. Accounting reform measures of some kind have been taken in each generation to attempt to keep bookkeeping relevant to capital assets or production capacity. However, these have not changed the basic principles, which are supposed to be independent of economics as such. In recent times, the divergence of accounting from economic principles has resulted in controversial reforms to make financial reports more indicative of economic reality. Critical approaches such as Social accounting challenge conventional accounting, in particular financial accounting, for giving a narrow image of the interaction between society and organisations, and thus artificially constraining the subject of accounting. Social accounting in particular argues that organisations ought to account for the social and environmental effects of their economic actions. Accounting should thus not only embrace descriptions of purely economic events, not be exclusively expressed in financial terms, aim at a broader group of stakeholders and broaden its purpose beyond reporting financial success. History of accountancy Early history. Accountancys infancy dates back to the earliest days of humanagriculture and civilization the Sumerians in Mesopotamia, and the Egyptian Old Kingdom. Ancient economic thought of the Near East facilitated the creation of accurate records of the quantities and relative values of agricultural products, methods that were formalized in trading and monetary systems by 2. BC. Simple accounting is mentioned in the Christian Bible New Testament in the Book of Matthew, in the Parable of the Talents. The Islamic Quran also mentions simple accounting for trade and credit arrangements. In the twelfth century A. D., the Arab writer, Ibn Taymiyyah, mentioned in his book Hisba literally, verification or calculation detailed accounting systems used by Muslims as early as in the mid seventh century A. Video Adobe After Effects Cs3 Cracked. D. These accounting practices were influenced by the Roman and the Persian civilizations that Muslims interacted with. The most detailed example Ibn Taymiyyah provides of a complex governmental accounting system is the Divan of Umar, the second Caliph of Islam, in which all revenues and disbursements were recorded. The Divan of Umar has been described in detail by various Islamic historians and was used by Muslim rulers in the Middle East with modifications and enhancements until the fall of the Ottoman Empire. Luca Pacioli and the birth of modern accountancy. Luca Pacioli 1. 44. Friar Luca dal Borgo, is credited for the birth of accountancy. His Summa de arithmetica, geometrica, proportioni et proportionalita Summa on arithmetic, geometry, proportions and proportionality, Venice 1. Italy, where the sons of merchants and craftsmen were educated. It was a compendium of the mathematical knowledge of his time, and includes the first printed description of the method of keeping accounts that Venetian merchants used at that time, known as the double entry accounting system. Although Pacioli codified rather than invented this system, he is widely regarded as the Father of Accounting. The system he published included most of the accounting cycle as we know it today. He described the use of journals and ledgers, and warned that a person should not go to sleep at night until the debits equaled the credits. His ledger had accounts for assets including receivables and inventories, liabilities, capital, income, and expenses the account categories that are reported on an organizations balance sheet and income statement, respectively. He demonstrated year end closing entries and proposed that a trial balance be used to prove a balanced ledger. His treatise also touches on a wide range of related topics from accounting ethics to cost accounting.