Accounting Presentation

1. Accounting
Presentation

2. IntroductionIntroduction
What is accounting?
Accountancy or accounting is the art of communicating
financial information about a business entity to users such as
shareholders and managers. The communication is generally
in the form of financial statements that show in money terms
the economic resources under the control of management
.

3. Etymology
¨The word "Accountant" is derived from the
French word "Compter" which took its
origin from the Latin 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 and in
orthography to its present form.

4. Early history
¨Accountancy's infancy dates back to the earliest days of human agriculture 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 2000 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 AD, 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 AD 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.
¨The development of mathematics and accounting were intertwined during the Renaissance.
Mathematics was in the midst of a period of significant development in the late 15th century. Hindu-
Arabic numerals and algebra were introduced to Europe from Arab mathematics at the end of the
10th century by the Benedictine monk Gerbert of Aurillac, but it was only after Leonardo Pisano
(also known as Fibonacci) put commercial arithmetic, Hindu-Arabic numerals, and the rules of

5. Luca Pacioli and double-entry
bookkeeping
¨A double-entry bookkeeping system is defined as any bookkeeping system in which there was a debit and
credit entry for each transaction, or for which the majority of transactions were intended to be of this form.[7]
Luca Pacioli wrote a 27-page treatise on bookkeeping that contained the first known published work on that
topic, and is said to have laid the foundation for double-entry bookkeeping as it is practiced today.[8]
¨
¨Pacioli's portrait, a painting by Jacopo de' Barbari, 1495, (Museo di Capodimonte).[9]Pacioli's "Summa de
Arithmetica, Geometria, Proportioni et Proportionalità" (trans. "Review of Arithmetic, Geometry, Ratio and
Proportion") was first printed and published in Venice in 1494. It included a 27-page treatise on bookkeeping,
"Particularis de Computis et Scripturis" (trans. "Details of Accounting and Recording"). It was written
primarily for, and sold mainly to, merchants who used the book as a reference text, as a source of pleasure
from the mathematical puzzles it contained, and to aid the education of their sons. It represents the first
known printed treatise on bookkeeping; and it is widely believed to be the forerunner of modern bookkeeping
practice. In Summa Arithmetica, Pacioli introduced symbols for plus and minus for the first time in a printed
book, symbols that became standard notation in Italian Renaissance mathematics. Summa Arithmetica was
also the first known book printed in Italy to contain algebra.[10]
¨According to Pacioli, accounting is an ad hoc ordering system devised by the merchant. Its regular use
provides the merchant with continued information about his business, and allows him to evaluate how things
are going and to act accordingly. Pacioli recommends the Venetian method of double-entry bookkeeping
above all others. Three major books are at the direct basis of this system: the memoriale ( trans.
memorandum), the giornale (journal), and the quaderno (ledger). The ledger is considered as the central one
and is accompanied by an alphabetical index.[11]

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