Accounting overview

Accountancy (profession) or accounting				his treatise on bookkeeping.
(methodology) is the measurement, disclosure or				The first known English book on the science was
provision of assurance about information that				published in London by John Gouge or Gough in
helps managers and other decision makers make				1543. It is described as A Profitable Treatyce
resource allocation decisions. Financial accounting is				called the Instrument or Boke to learn to knowe
one branch of accounting and historically has				the good order of the kepyng of the famouse
involved processes by which financial information				reconynge, called in Latin, Dare and Habere, and, in
about a business is recorded, classified,				English, Debitor and Creditor.
summarized, interpreted, and communicated.				A short book of instructions was also published in
Auditing, a related but separate discipline, is the				1588 by John Mellis of Southwark, in which he
process whereby an independent auditor				says, "I am but the renuer and reviver of an
examines an organization's financial statements				ancient old copie printed here in London the 14 of
and accounting records in order to express an				August 1543: collected, published, made, and set
opinionâ€”that conveys reasonable but				forth by one Hugh Oldcastle, Scholemaster, who,
not absolute assuranceâ€”as to the truth				as appeareth by his treatise, then taught
and fairness of the statements and the				Arithmetics, and this booke in Saint Ollaves parish
accountant's adherence to Generally Accepted				in Marko Lane." John Mellis refers to the fact that
Accounting Principles (GAAP), in all material				the principle of accounts he explains (which is a
respects. At the heart of accounting is the				simple system of double entry) is "after the
measurement of financial transactions which are				forme of Venice".
transfers of legal property rights made under				The very interesting and able book described as
contractual relationships. Non-financial transactions				The Merchants Mirrour, or directions for the
are specifically excluded due to conservatism and				perfect ordering and keeping of his accounts
materiality principles.				formed by way of Debitor and Creditor, after the
Practitioners of accountancy are known as				(so termed) Italian manner, by Richard Dafforne,
accountants. There are many professional bodies				accountant, published in 1635, contains many
for accountants throughout the world. Many allow				references to early books on the science of
their members to use titles indicating their				accountancy. In a chapter in this book, headed
membership. Examples are Chartered Certified				"Opinion of Book-keeping's Antiquity," the author
Accountant (ACCA), Chartered Accountant (CA				states, on the authority of another writer, that
or ACA) and Certified Public Accountant (CPA).				the form of book-keeping referred to had then
Accountancy attempts to create accurate				been in use in Italy about two hundred years, "but
financial reports that are useful to managers,				that the same, or one in many parts very like
regulators, and other stakeholders such as				this, was used in the time of Julius Caesar, and in
shareholders, creditors, or owners. The				Rome long before." He gives quotations of Latin
day-to-day record-keeping involved in this process				book-keeping terms in use in ancient times, and
is known as bookkeeping.				refers to "ex Oratione Ciceronis pro Roscio
At the heart of modern financial accounting is the				Comaedo"; and he adds: "That the one side of
double-entry bookkeeping system. This system				their booke was used for Debitor, the other for
involves making at least two entries for every				Creditor, is manifest in a certain place, Naturalis
transaction: a debit in one account, and a				Historiae Plinii, lib. 2, cap.
corresponding credit in another account. The sum				7, where hee, speaking of Fortune, saith thus: Huic
of all debits should always equal the sum of all				Omnia Expensa.
credits. This provides an easy way to check for				Huic Omnia Feruntur accepta et in tota Ratione
errors. This system was first used in medieval				mortalium sola Utramque Paginam facit." An early
Europe, although claims have been made that the				Dutch writer appears to have suggested that
system dates back to Ancient Greece.				double-entry book-keeping was even in existence
According to critics of standard accounting				among the Greeks, pointing to scientific
practices, it has changed little since. Accounting				accountancy having been invented in remote
reform measures of some kind have been taken				times.
in each generation to attempt to keep				There were several editions of Richard Dafforne's
bookkeeping relevant to capital assets or				book printed---the second edition having been
production capacity. However, these have not				published in 1636, the third in 1656, and another
changed the basic principles, which are supposed				was issued in 1684. The book is a very complete
to be independent of economics as such.				treatise on scientific accountancy, beautifully
History Accountancy's infancy dates back to the				prepared and containing elaborate explanations.
earliest days of human agriculture and civilization				The numerous editions tend to prove that the
(the Sumerians in Mesopotamia), when the need				science was highly appreciated in the 17th century.
to maintain accurate records of the quantities and				From this time on, there has been a continuous
relative values of agricultural products first arose.				supply of literature on the subject, many of the
The art of accountancy based upon a logical				authors styling themselves accountants and
mathematic system (double-entry book-keeping)				teachers of the art, and thus proving that the
must certainly have been understood in Italy				professional accountant was then known and
before 1495, when Luca Pacioli (1445 - 1517), also				employed.
known as Friar Luca dal Borgo, published at Venice

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Accounting overview

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