The concept of accountancy

Brief history of accounting

Early references to the subject of accounting may be found in the works of certain ancient oriental writers. However, the systematic approach to double entry system of book keeping and accounting as we know today has dated back to the late thirteenth century. In 1494, Luca Pacioli a Franciscan Monk living in Italy, published his well known work, Summa de Arithmetica, Geometria, Proportion, Proportionality. It was primarily a study of mathematics but it also included a section on bookkeeping procedures.

The meaning of the term "accounting"

What is accounting?

It is the art of recording, classifying and summarizing in a significant manner in terms of money transactions which are of financial character and interpreting the results.

Branches/fields of accounting

There are three major fields of accounting which are:

1. Financial accounting. This is an accounting field which is concerned with the provision of financial information about the business firm mainly to external users.

2. Management accounting. This is an accounting field which is concerned with the provision of accounting information to internal users, which is the management of the firm. The kinds of financial reports and data which management accounting offers are aimed to help management in planning and controlling business operations and in decision making.

3. Government accounting. This is an accounting field counterparting for the government sector. There are however, basic differences between the two which explain why government accounting has come to be considered as a separate area of accounting.