Introduction & History of Accounting

INTRODUCTION
Accounting and Bookkeeping, the process of identifying, measuring, recording, and communicating economic information about an organization or other entity, in order to permit informed judgments by users of the information. Bookkeeping encompasses the record-keeping aspect of accounting and therefore provides much of the data to which accounting principles are applied in the preparation of financial statements and other financial information.
Personal record keeping often uses a simple single-entry system, in which amounts are usually recorded in column form. Such entries include the date of the transaction, its nature, and the amount of money involved. Record keeping of organizations, however, is based on a double-entry system, whereby each transaction is recorded on the basis of its dual impact on the organization’s financial position or operating results or both. Information relating to the financial position of an enterprise is presented on a balance sheet, while disclosures about operating results are displayed on an income statement. Information relating to an organization’s liquidity—namely, how it obtains and spends cash—is shown on a statement of cash flows. These three financial statements provide information about past performance, which in turn becomes a basis for readers to try to project what might happen in the future.

HISTORY
Bookkeeping and record-keeping methods, created in response to the development of trade and commerce, are preserved from ancient and medieval sources. Double-entry bookkeeping began in the commercial city-states of medieval Italy and was well developed by the time of the earliest preserved double-entry books, from 1340 in Genoa.
The first published accounting work was written in 1494 by the Venetian monk Luca Pacioli. Although it disseminated rather than created knowledge about double-entry bookkeeping, Pacioli's work summarized principles that have remained essentially unchanged. Additional accounting works were published during the 16th century in Italian, German, Dutch, French, and English, and these works included early formulations of the concepts of assets, liabilities, and income.
The Industrial Revolution of the mid-1700s created a need for accounting techniques that would be adequate to handle mechanization, factory-manufacturing operations, and the mass production of goods and services. With the emergence in the mid-19th century of large, publicly owned business corporations, owned by absentee stockholders and administered by professional managers, the role of accounting was further redefined.
Starting in the mid-20th century, machines—particularly computers—performed many of the bookkeeping functions that are vital to accounting systems. The widespread use of computers broadened the scope of bookkeeping, and the term data processing now frequently encompasses bookkeeping.