Question

Now that you’ve completed the readings, your task is to write a two-page paper explaining what you know thus far about the nature of accounting. Include at least 2 sources of information as a part of your paper. You may cite a source from your reading but please also include one new source of information. It may be a book or electronic article. Your paper should address the following points: A brief historical timeline of the accounting field The purpose of accounting Types of accounting- Discuss at least 3 specific sectors of accounting that relate to specific industries

Answer 1

History of Accounting.

       It is at the time Mesopotamia actually the process of accounting Started it's before 7000 years from the current period. There are certain documents founded out includes expenditure receipt and goods receipt documents which of that time period. It is a developed as result of development in the use of money, implementation of the tax system, increase in the volume of trading activities.

    During the time period of 4^thmillennium to 3^rd millennium, the kings started to employ people who are good in finance computation and finance management as accountants of their legislature. They are so many evidence are their which show there was bookkeeping system in many regimens. It is so trusted that the Egyptians and Babylonians implemented the auditing system first. The double entry system was 1^st introduced in Europe in the 13^th century. Farofilledger 1299 Giovamon company situated in Nimes act as the first evidence of double entry system. The financial management accounting can be traced about 1600 years ago. As the investors and external parties associated with a company increased the subject classified to different fields to provide more information to its stakeholders. Conclusively the current accounting system is the result of continues thought process over 1000 of years and still growing day by day.

Purpose of accounting.

To Ascertain the amount of profit or loss made by the business.

       Every business is performed to make to profit except nonprofit organization. So the different stakeholders need information regarding how much profit a business generated in a year, For this the firm uses accounting. The income statement prepared by the accountant of the company give the information regarding how much profit a company generated in the accounting year.

To know the financial position.

It's important to know what is the current financial position of a company. that means how many assets the company has in a year, out of that how much it has to pay to external parties. how much is goes wealth goes its equity holders etc. this information will be provided by the balance sheet prepared by an accountant at end of a year.

Legal Requirements.

     The government and other legal organization in a country want certain financial information regarding the companies. To determine tax for the company and know the company is following rules and regulations formed by the government in its decision making. This information’s will be provided by accounting statements prepared by an accountant.

To provide information to other stakeholders.

    There are other stakeholders like the creditor, customers, debtors employees etc who requires financial information regarding the company to make the certain decision. this information will provide the financial statements which will usable for decision making.

In short, accounting provides information regarding profit or loss financial position etc regarding the company which is helpful for parties for decision making. either they are external or internal to the company.

Types of Accounting.

The major classification of accounting is as follows.

1. Financial accounting.
2. Cost accounting
3. Management Accounting.

Financial Accounting.

      Finance accounting is the process of recording, classifying and summarizing interpreting the transaction which is having a financials characteristic. It includes the following Steps.

• Identifying Transactions having financial transactions and recording the same known as journalizing
• Second is classifying the transaction and posting transaction having similar nature under one head call ledger preparation.
• Summarizing transaction to know the results of the business. this is done by preparation of income statement, Balance sheet, a statement of changes in equity and Cash flow statement.
• Interpreting the results using rations and decision making based on that through making the vertical and horizontal comparison.

Cost Accounting.

Cost accounts are the process of recording classifying, summarizing and interpreting transaction based on its cost behavior. This is helpful for making the decision like the price of product profit margin to be included etc. while financial accounting deal with a border level. cost accounting nothing but specialization.

Management accounting.

Management accounting can be traded as the results of coast accounting and Financial accounting. Management accounting uses information from financial accounting as well cost accounting to make certain ratios and thereby taking decision for future.

As conclusion When financial accounting stands for a border level of accounting cost accounting is specialized accounting and management accounting uses the results of these to accounting systems.