1ccountancy (UK), or accounting (US), is the production of financial records about

an organization. Accountancy generally producesfinancial statements that show in money terms the economic resources under the control of management; selecting information that is relevant and representing it faithfully. The principles of accountancy are applied to accounting, bookkeeping, [3] and auditing. Many tedious accounting practices have been simplified with the help of computer software. Enterprise resource planning (ERP) software provides a comprehensive, centralized, integrated source of information that companies can use to manage all major business processes, from purchasing to manufacturing to human resources. This software can replace up to 200 individual software programs that were previously used. Computer integrated manufacturing allows products to be made and completely untouched by human hands and can increase production by having less errors in manufacturing process. Computers have reduced the cost of accumulating, storing, and reporting managerial accounting information and have made it possible to produce a more detailed account of all data that is entered into any given system. Computers have changed business to business interaction through e-commerce. Rather than dealing with multiple companies to purchase products a business can purchase a product at a less expensive price and take out the third party and vastly reduces expenses companies once accrued. Inter-organizational information system enable suppliers and businesses to be connected at all times. When a company is low on a product the supplier will be notified and fulfill an order immediately which eliminates the need for someone to do inventory, fill out the proper documents, [4] send them out and wait for their products. Accounting is thousands of years old; the earliest accounting records, which date back more than 7,000 years, were found in Mesopotamia(Assyrians). 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 [5] advancing as business advanced. Early accounts served mainly to assist the memory of the businessperson and the audience for the account was the proprietor or record keeper alone. Cruder forms of accounting were inadequate for the problems created by a business entity involving multiple investors, sodouble-entry bookkeeping first emerged in northern Italy in the 14th century, where trading ventures began to require more capital than a single individual was able to invest. The development of joint-stock companies created wider audiences for accounts, as investors without firsthand knowledge of their operations relied on accounts to provide [6] the requisite information. This development resulted in a split of accounting systems for internal (i.e. management accounting) and external (i.e. financial accounting) purposes, and subsequently also in accounting and disclosure regulations and a growing need for independent attestation of external [7] accounts by auditors. 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 and is used to provide information to employees, managers, owner-managers and auditors. 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 and provides information to present and potential shareholders, creditors such as banks or vendors, financial analysts, economists, and government agencies. Because these users have different needs, the presentation of financial accounts is very structured and subject to many more rules than management
[8] [1][2]

accounting. The body of rules that governs financial accounting in a given jurisdiction is called Generally Accepted Accounting Principles, or GAAP. Other rules include International Financial Reporting [9] Standards, or IFRS, or US GAAP.
Contents
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1 Theory 2 Etymology 3 History

o o o o o o o

3.1 Ocher plaque accounting in ancient South Africa 3.2 Token accounting in ancient Mesopotamia 3.3 Clay-token accounting in ancient Iran 3.4 Accounting in the Roman Empire 3.5 Luca Pacioli and double-entry bookkeeping 3.6 Modern professional accounting - Scotland 3.7 Accounting in the internet era

4 Accounting scandals 5 See also 6 Notes and references

Theory[edit]
This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (November 2012) The basic accounting equation is assets = liabilities + equity. This is the Statement of Financial Position (It is the new name of Balance Sheet according to IFRS). The foundation for the balance sheet begins with the income statement, which is revenues - expenses = net income or net loss. This is followed by the retained earnings statement, which is beginning retained earnings + net income + additional capital(capital contribution) - dividends/drawings = ending retained earnings. This is also used in many businesses.

Etymology[edit]
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 [10] in pronunciation and in orthography to its present form (see also comptroller).

History[edit]

Ocher plaque accounting in ancient South Africa[edit]

The Smithsonian Museum now has a systematically engraved ocher plaque, from the Blombos Cave in South Africa. It is about 76,000 years old, with marks that may have been used to count or store information. A close-up look shows that the markings are clearly organized. This suggests, to some researchers, that they represent information rather than decoration. This could mean accounting is far [11] older than previously thought.

Token accounting in ancient Mesopotamia[edit]

Map of the Middle East showing the Fertile Crescent circa 3rd millennium BC.

The earliest accounting records were found amongst the ruins of ancient Babylon, Assyria and Sumeria, 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 had been gained after the crops had been harvested or the young [5] animals weaned.

Clay-token accounting in ancient Iran[edit]

Between the 4th millennium BC and the 3rd millennium BC, in ancient Iran, new socioeconomic situations resulted in unequal distribution of wealth and in such conditions leaders and priests started to rule. They had people to look after the financial matters. In Godin Tepe ( ) and also Tepe Yahya ( ni dnuof erew snekot lacirdnilyC .sporc fo egarots rof smoor egral htiw derevocsid erew sgnidliub ,( these buildings, which were used for bookkeeping on clay scripts. In Godin Tepe's findings, the scripts only contained tables with figures. In Tepe Yahya's findings, the scripts also contained graphical [12] representations.

Accounting tokens made of clay, from Susa, Uruk period, circa 3500 BC. Department of Oriental Antiquities, Louvre.

The invention of a form of bookkeeping using clay tokens represented a huge cognitive leap for [13] mankind.

Globular token envelope with a cluster of accounting tokens. Clay,Susa, Uruk period (4000 to 3100 BC). Department of Oriental Antiquities, Louvre.

Economic tablet with numeric signs. Proto-Elamite script in clay,Susa, Uruk period (3200 BC to 2700 BC). Department of Oriental Antiquities, Louvre.

Accounting in the Roman Empire[edit]

Part of the Res Gestae Divi Augusti from the Monumentum Ancyranum (Temple of Augustus and Rome) at Ancyra, built between 25 BCE - 20 BCE.

The Res Gestae Divi Augusti (Latin: "The Deeds of the Divine Augustus") is a remarkable account to the Roman people of the Emperor Augustus' stewardship. It listed and quantified his public expenditure, which encompassed distributions to the people, grants of land or money to army veterans, subsidies to the aerarium (treasury), building of temples, religious offerings, and expenditures on theatrical shows a