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• Accounting

  A system that measures business activities, processes that information into reports and communicates the results to decision makers
• Accounting quantifies business communication. For this reason, accounting is called the language of business
• Accountants


  The scorekeepers of business
• Accounting function

  • Part of the broader business system and does not operate in isolation
  • Handles the financial operations of the business but also provides information and advice to other departments
• Recording


  Business transactions are recorded thematically and chronologically in the proper accounting books
• Classifying


  Items are sorted and grouped, with similar items being classified under the same name
• Summarizing


  Data recorded are summarized through financial statements
• Interpreting


  Accountant's interpretation on the financial statements
• Accounting Information System


  Used by a business to analyze transactions, handle routine bookkeeping tasks and structure information so it can be used to evaluate the performance health of the business
• Internal reports


  Financial reports generated by the Accounting Information System
• External reports

  Financial reports generated by the Accounting Information System
• Primitive Accounting


  • Clay Tokens
  • Used in the Middle East to keep records of commodities like sheep, oil, bread or clothing
  • Tokens were often sealed in clay balls called bullae, which where broken on delivery so the shipment could be checked against the invoice
• Ancient civilizations

  • China
  • Babylonia
  • Greece
  • Egypt
• During the 1st dynasty of Babylonia (2286-2242 B.C.), its law which was based on the Code of Hammurabi, requires merchants trading goods to give buyers a sealed memorandum containing the agreed price before it can be considered enforceable
• At around 3600 B.C in Babylonia, clay tablets also recorded payment of wages
• The rulers of ancient civilizations used accounting to keep track of the costs of labor and materials used in building structures as in the case of the pharaohs of Egypt in building their great pyramids
• 7 Preconditions for the Emergence of Systematic Bookkeeping

  • Art of Writing
  • Arithmetic
  • Private Property
  • Money
  • Credit
  • Commerce
  • Capital
• The Florentine Approach

  • Earliest evidence of business bookkeeping in Florence, France was evidenced by the bank ledger fragments of 1211
  • Development of accounting in Tuscany, Italy during the 13th century, as evidenced in the account-books or extracts
  • Accounts were not related in any special way and balancing of the accounts was lacking
  • Emergence of double entry itself was first witnessed in the "ledger" of Renieri Fini & Broithers (1296-1305) and Giovanni Farolfi & Company (1299-1300)
• Amatino Manucci

  Managed to construct a comprehensive and fully articulated set of double-entry records, with a regular balancing procedure on closure of the General Ledger
• The Method of Venice


  • Luca Pacioli, a Franciscan friar and celebrated mathematician, is generally associated with the introduction of double-entry bookkeeping
  • Although Pacioli made no claim to developing the art of bookkeeping, he has been regarded as the father of double-entry accounting
  • He stated that the purpose of bookkeeping was "to give the trader without delay information as to his assets and liabilities"
  • He said "It is always good to close the books each year, especially if you are in a partnership with others. Frequent accounting makes for long friendship"
• Ordonnance de Commerce of 1673

  • The earliest systematized form of accounting regulation developed in continental Europe, starting in France in 1673
  • The government introduced the submission of an annual fair value statement of financial position to protect the economy from bankruptcy
  • It is the legal requirement for businesses to keep accounting records
• Nicolas Petri


  In the 17th century, he was the first person to group similar transactions in a separate record and enter the monthly totals in the journal, rather than recording all transactions in a series
• Benjamin Workman

  In 1769, he published The American Accountant, the earliest-known American accounting textbook
• Industrial Revolution and Corporate Organization

  • Changed the method of producing commercial goods from the handicraft method to the factory system
  • Development of corporate form of organization
  • Accountancy reached the shores of United States of America as a natural result of investments being made by British businessmen
• Railroads

  • Heavy users of debt financing in the late 1800s
  • Were the first American firms to issue balance sheets to absentee creditors
  • Depreciation had become a tool used by management to counter fluctuations in profits
• On March 12, 1903, United States Steel published consolidated financial statements as of December 31, 1902, together with Price Waterhouse & Company's assurance that they were audited and found correct
• Eugen Schmalenbach

  In early 1920s, he was frustrated repeatedly with his failure to compare meaningfully the financial data made available by different companies. This led to a research on the problem and the publication of his book, The Modern Chart of Accounts
• Dan Brinklin and Bob Frankston

  They wrote VisiCalc for the Apple II, the first electronic spreadsheet, the most important business application for the personal computer
• Corporate form of organization

  Development of
• Accountancy reached the shores of United States of America as a natural result of investments being made by British businessmen
• Railroads


  • They are the heavy users of debt financing in the late 1800s
  • Were the first American firms to issue balance sheets to absentee creditors
  • Depreciation had become a tool used by management to counter fluctuations in profits
• Schmalenbach and The Model Chart of Accounts


  In early 1920s, Eugen Schmalenbach was frustrated repeatedly with his failure to compare meaningfully the financial data made available by different companies. This led to a research on the problem and the publication of his book, The Modern Chart of Accounts
• VisiCalc, the first electronic spreadsheet, the most important business application for the personal computer, was written by Dan Brinklin and Bob Frankston for the Apple II
• Tasks those are time-consuming when done manually can now be done with speed, consistency, precision, and reliability by computers
• Republic Act 9298, the Philippine Accountancy Act of 2004, was signed into law by President Gloria Macapagal-Arroyo on May 13, 2004. This law regulates the practice of accountancy in the Philippines. It repealed Presidential Decree 692, the Revised Accountancy Law, which was enacted May 5, 1975
• Practice of Accountancy


  • Practice of Public Accountancy
  • Practice in Commerce and Industry
  • Practice in Education/Academe
  • Practice in Government
• Bookkeeping

  A mechanical task involving the collection of basic financial data. The data are first entered in the accounting records or the books of accounts, and then extracted, classified and summarized in the form of income statement, balance sheet, and cash flows statement
• Financial Accounting

  Involves recording and classifying business transactions, and preparing and presenting financial statements to be used by internal and external users. In the preparation of financial statements, strict compliance with generally accepted accounting principles or GAAP is observed. Financial accounting is primarily concerned in processing historical data
• Management Accounting

  Focuses on providing information for use by internal users, the management. This branch deals with the needs of the management rather than strict compliance with generally accepted accounting principles. Managerial accounting involves financial analysis, budgeting and forecasting, cost analysis, evaluation of business decisions, and similar areas
• Financial accounting is primarily concerned in processing historical data, while management accounting focuses on providing information for use by internal users, the management