[INTRODUCTION TO

ACCOUNTING]
Definition, nature, function, and history of accounting
Definition

 A systematic process of identifying, recording, measuring, classifying, verifying, summarizing,

interpreting and communicating financial information. It reveals profit or loss for a given period,
and the value and nature of a firm’s assets, liabilities and owner’s equity.
(accounting.BusinessDictionary.com.)
 Accounting is the process of recording financial transactions pertaining to a business.
(investopedia.com)
 Accounting is also called the language of business.
 Accountancy may be defined as the art of recording, classifying and summarizing in a significant
manner and in terms of money, transactions and events, which are in part, at least of financial
character, and interpreting the results thereof. (AICPA – American Institute of Certified Public Accountants)

Brief History / Origin of Accounting

14th & 15th century. The Italians of the Renaissance period are regarded as the fathers of modern
accounting.

Venice, Italy. It is where key influence on double-entry accounting came from. It is considered as the
commercial city of the Renaissance.

“Summa de Arithmetica Geometria Proportioni et Proportionalita” by an Italian monk, Fra Luca

Pacioli, is the first published work on double-entry bookkeeping (1494)

Fra Luca Pacioli is called the 'father of accounting'

16th to 18th Century. Center of Commerce shifted from Italy to Spain to Portugal and then to
Northern Europe.

1673, France adopted its first official accounting code.

Middle 19th Century. Great Britain led in production of coal iron and cotton textile. It also became
the financial center of the civilized world. Men with experience in bookkeeping became
accountants.

1973, the International Accounting Standards Council was formed to develop a body of accounting
standards suitable to use around the world.

Prior to 1981, the Philippines had adopted the generally accepted accounting principle (GAAP) which
were principally US-GAAP based.

Currently, Philippines is one of the countries worldwide that has fully adopted the International
Financial Reporting Standards (IFRSs).