WHAT IS ACCOUNTING

Accounting, as defined by the American accounting association (AAA), ‘is the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of information.

It can also be defined as the systematic process of measuring business activities and providing information that helps users make sound economic decisions.

Accounting plays an important role in our lives. It affects everyone. 

Decisions such as personal financial planning, investments, income tax, etc can only make through accounting information.

Therefore, it will be not an exaggeration to say that the knowledge of accounting is an essential commodity for everybody. 

Business-wise, accounting is also important. It encompasses all the processes of recording, identifying, classifying, and summarizing economic events about an entity.

Accounting has been called the language of business. It is called so because it provides basic information about a business. 

With accounting records, you can learn virtually everything about a business.

Accounting goes beyond the mere recording of business transactions – which is the process of book-keeping.

Accounting encompasses the whole process of preparing, analyzing, and communicating financial statements through the transaction recorded by the book-keeper.

Accounting and book-keeping
Bookkeeping is the systematic recording of business transactions. Book-keeping is done by the bookkeeper. 

Book-keeper keeps track of business transactions. Bookkeeping is an important process in accounting.

Accounting encompasses the whole process of preparing, analyzing, and communicating financial statements based on the transaction recorded through the bookkeeping process.

This accounting process is usually done by an accountant. 

In most jurisdictions, accountants are usually required to complete at least a bachelor's degree in accounting or have written professional exams in accounting.

History of accounting
The history of accounting is as old as civilization. Accounting records can be traced back to ancient civilizations of China, Babylon, and Egypt who uses tablets and clay to record payment of taxes costs of laborers used in building structures like pyramids.

With the demand for accounting increasing in the 1400s, the first book of double-entry Summa de Arithmetica, Geometria, Proportion at Proportionality   (Review of Arithmetic and Geometric proportions) was written In 1494

This book was written by an Italian monk and mathematician Luca Pacioli in Venice.

Luca Pacioli is usually considered the father of book-keeping and accounting because he provided the basic idea of the modern understanding of accounting terms such as debit and credit, journals, and ledger.

ROLE OF ACCOUNTANTS
The term accountant needs no formal introduction. An accountant is someone who is involved in the accounting process.

The role of accountants in every organization can not be overemphasized. These roles are highlighted in the next paragraph.

As everyone knows, the primary job of an accountant is recording business transactions and preparation of the financial statement.

This is true considering the fact managers and other users of accounting information are generally interested in the financial performance of the business.

Accountants, in a bid to perform this function, usually prepared a formal report called financial statements. 

Accountants usually prepare these financial statements (statement of profit and loss, statement of financial position) using some fundamental assumptions. These fundamental assumptions are called accounting concepts

Seen from this point of view, an accountant may be classified as financial accountants.

Another job carried out by an accountant is management control.

Management control is the process of diagnosing an error or problem and taking corrective measures to solve such problems.

Accountants detect and solve business problems. This is because accounting reports show the strength and weaknesses of a business

Accountants that perform this role management control are usually called management accountants. Management accountant mostly solve a business problem through the accounting process

Information management is yet another job done by accountants. An accountant's job does not just end with preparing financial statements. Rather, it goes further to include the communicating of information to users.

However, not every information is useful to every stakeholder of a business. For example, the information of day-to-day running costs of the business will be of less use to the customer of the business

Hence, accountants play the role of ensuring that the right information gets to the right people. 

To achieve this, he will categorize accounting information into two: information for internal use(management accounting) and information for external users(Financial accounting). This ensures that the user receives the relevant reports.

Accounting as a source of information
Accounting provides every piece of information relating to an economic entity. Hence, it can be referred to as the information management system of every organization. 

This is because it provides information to the various stakeholder who needs this information to make one or two decisions.

As an information management system, accounting performs the following functions

1. Provide the information required by various stakeholders to make a certain decision that is economical.

2. Accounting records business transactions that serve as the major source of information to various users of this information.

3. It provides management with sufficient information needed to successfully manage a business.

4. Accounting information tells the story of business activity in a society.
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