Accounting

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"Accountancy" redirects here. For the constituency in Hong Kong, see Accountancy
(constituency). For the game, see Accounting (video game).

Accounting or accountancy is the measurement, processing, and communication of

financial and non financial information about economic entities[1][2] such
as businesses and corporations. Accounting, which has been called the "language of
business",[3] measures the results of an organization's economic activities and conveys
this information to a variety of users, including investors, creditors, management,
and regulators.[4] Practitioners of accounting are known as accountants. The terms
"accounting" and "financial reporting" are often used as synonyms.
Accounting can be divided into several fields including financial
accounting, management accounting, external auditing, tax accounting and cost
accounting.[5][6] Accounting information systems are designed to support accounting
functions and related activities. Financial accounting focuses on the reporting of an
organization's financial information, including the preparation of financial statements, to
the external users of the information, such as investors, regulators and suppliers;[7] and
management accounting focuses on the measurement, analysis and reporting of
information for internal use by management. [1][7] The recording of financial transactions,
so that summaries of the financials may be presented in financial reports, is known
as bookkeeping, of which double-entry bookkeeping is the most common system.[8]
Accounting has existed in various forms and levels of sophistication throughout human
history. The double-entry accounting system in use today was developed in medieval
Europe, particularly in Venice, and is usually attributed to the Italian mathematician and
Franciscan friar Luca Pacioli.[9] Today, accounting is facilitated by accounting
organizations such as standard-setters, accounting firms and professional
bodies. Financial statements are usually audited by accounting firms,[10] and are
prepared in accordance with generally accepted accounting principles (GAAP).[7] GAAP
is set by various standard-setting organizations such as the Financial Accounting
Standards Board (FASB) in the United States[1] and the Financial Reporting Council in
the United Kingdom. As of 2012, "all major economies" have plans to converge towards
or adopt the International Financial Reporting Standards (IFRS).[11]

Contents

 1History

 2Etymology

o 2.1Terminology

 3Topics

o 3.1Financial accounting

o 3.2Management accounting

o 3.3Auditing

o 3.4Information systems
 o 3.5Tax accounting

o 3.6Forensic accounting

o 3.7Political campaign accounting

 4Organizations

o 4.1Professional bodies

o 4.2Firms

o 4.3Standard-setters

 5Education, training and qualifications

o 5.1Degrees

o 5.2Professional qualifications

 6Research

 7Scandals

 8Fraud and error

 9See also

 10References

 11External links

History[edit]
Main article: History of accounting
Portrait of Luca Pacioli, painted by Jacopo de' Barbari, 1495, (Museo di Capodimonte).

Accounting is thousands of years old and can be traced to ancient civilizations.[12][13][14] The

early development of accounting dates back to ancient Mesopotamia, and is closely
related to developments in writing, counting and money;[12] there is also evidence of early
forms of bookkeeping in ancient Iran,[15][16] and early auditing systems by the
ancient Egyptians and Babylonians.[13] By the time of Emperor Augustus, the Roman
government had access to detailed financial information.[17]
Double-entry bookkeeping was pioneered in the Jewish community of the early-
medieval Middle East[18][19] and was further refined in medieval Europe.[20] With the
development of joint-stock companies, accounting split into financial
accounting and management accounting.
The first published work on a double-entry bookkeeping system was the Summa de
arithmetica, published in Italy in 1494 by Luca Pacioli (the "Father of Accounting").[21]
[22]
 Accounting began to transition into an organized profession in the nineteenth century,
[23][24]
 with local professional bodies in England merging to form the Institute of Chartered
Accountants in England and Wales in 1880.[25]

Etymology