Accounting can be defined in a number of ways, but I chose the book definition, which is; Accounting is an information system that provides reports to stakeholders about the economic activities and condition of business. The person in charge of accounting is called the accountant. The accountant is typically required to follow a set of rules and regulations. These rules and regulations are called the General Accepted Accounting Principles. Throughout these next few paragraphs, I will be giving you the history and evolution of accounting, and I will be explaining who the stakeholders are and what type of information they require, and I will be explaining the role of accounting in business. There will be many examples and type of business decisions throughout this whole paper.
The history of accounting dates all the way back to the fourteenth century. In 1494, Luca Pacioli, first published and printed his accounting book in Venice, Italy. Pacioli’s book included a 27-page step by step guide on bookkeeping. In his book Pacioli, introduced symbols for plus and minus for the first time in a printed book. His accounting book contained the first known published work of double-entry, and it was said that this laid the foundation for double-entry bookkeeping in the world today. Double-entry was defined as any accounting action that required a debit and credit transaction for each transaction. The very first known accounting book to be discovered in the English literature was published and printed in London, England by John Gouge in 1543.
Accounting can be broke down into four categories; Financial, management, open-book, and tax accounting. Financial accounting can be defined as a major branch of accounting involving the collection, recording and extraction of financial information. This type of accounting, is used for the preparation of financial statement for decision makers such as; stockholders, suppliers, banks, employees, government agencies, and owners. Management accounting is used to provide managers with information, so they can make informed business decisions. The next category is open-book accounting; this is defined as an accounting principle that aims to improve accounting in organizations. Tax-accounting is defined as the accounting needed to comply with jurisdictional tax regulations. In other words, tax-accounting is used to put tax on goods and services. Accounting has revolved into what every company uses today which is the equation of; Assets=Liabilties+Owners Equity. The meaning of this equation is to show companies what they own and what they owe to there creditors and everybody else.
Stakeholders can be defined as a person, group, organization, or system that affects or can be affected by an organization’s actions. Examples of stakeholders in accounting are; owners, suppliers, customers, government, employees, creditors, and labor unions. These people are classified into four categories; Capital Market, Product or Service...