SUMMARY

I. Introduction.....................................................................................................2

II. Hystorique of accounting................................................................................2

III. Utility of accounting....................................................................................3

IV. TYPES OF ACCOUNTING........................................................................3

1. Internal accounting.........................................................................................3

2. External accounting........................................................................................4

3. Tax accounting...............................................................................................4

V. conclusion.......................................................................................................5

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 I. Introduction
The accounting system consists of various subsystems (regulation subsystem,
professional organizations subsystem, of the enterprise, of accounting practices)
arising from the accounting system. Some authors limit the accounting systems
to financial reporting practices of all enterprises in a particular country or the
financial reporting practices of listed companies in the country or even a group
of countries. Roberts (1995) shows that it is possible for a country to have more
accounting systems: one for listed companies, one for unlisted companies.
Expanding the use of IFRS is an argument to the accounting system of listed
companies in the EU. The accounting must respond to the changing needs of the
society and reflect the economic, legal, cultural, social or political where they
work. In such conditions, it was agreed the proximity of accounting practices in
different countries, without their national referential to disappear tomorrow.

II. Hystorique of accounting

The history of accounting or accountancy is thousands of years old and can be
traced to ancient civilizations
The early development of accounting dates back to ancient Mesopotamia, and is
closely related to developments in writing, counting and money[1][4][5] and
early auditing systems by the ancient Egyptians and Babylonians By the time of
the Roman Empire, the government had access to detailed financial information
In India Chanakya wrote a manuscript similar to a financial management book,
during the period of the Mauryan Empire. His book "Arthashasthra" contains
few detailed aspects of maintaining books of accounts for a Sovereign State.
The Italian Luca Pacioli, recognized as The Father of accounting and
bookkeeping was the first person to publish a work on double-entry
bookkeeping, and introduced the field in Italy
The modern profession of the chartered accountant originated in Scotland in the
nineteenth century. Accountants often belonged to the same associations as
solicitors, who often offered accounting services to their clients. Early modern
accounting had similarities to today's forensic accounting. Accounting began to
transition into an organized profession in the nineteenth century, with
local professional bodies in England merging to form the Institute of Chartered
Accountants in England and Wales in 1880.

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III. Utility of accounting
The preceding section has just brought out the importance of information.
Effective decisions require accurate, reliable and timely information. The need
for quantity and quality of information varies with the importance of the
decision that has to be taken on the basis of that information. The following
paragraphs throw light on the various users of accounting information and what
do they do with that information. Individuals may use accounting information to
manage their routine affairs like operating and managing their bank accounts, to
evaluate the worthwhileness of a job in an organization, to invest money, to rent
a house, etc.
Business Managers have to set goals, evaluate progress and initiate Corrective
action in case of unfavorable deviation from the planned Course of action.
Accounting information is required for many such Decisions—purchasing
equipment, maintenance of inventory, borrowing and lending, etc.
In conclusion the accounting information system is a very integrate system. A
company needs to follow the correct steps when using the Strategic mode so that
the business does not fail from the huge makeover that it may be receiving from
the Strategic mode. Also making sure that a company has a contingency plan set
in place will help make sure that the company won’t fail if there is a disaster of
some sort. The company should also make sure that it is in compliance with the
Sarbanes Oxley Act of 2002.

IV. TYPES OF ACCOUNTING

In small enterprises there can be different kinds of accounting systems such as

external, internal and tax accounting. Annex 3 summaries data per Member
State concerning accounting system requirements for small enterprises. On the
basis of this data, the following descriptions of accounting systems are given:
1. Internal accounting
Internal accounting, also called management accounting is based on the
enterprise’s internal accounting procedures and recorded accounting
information. Internal accounting is intended for managers within organizations,
to provide them with the economic basis to make informed business decisions
that would allow them to be better equipped in their management and control
functions. For example, managers may want to be able to assess the contribution
or the profitability of different products or services that they supply by
comparing the revenues and costs that they generate. Unlike external accounting
information, internal accounting is usually confidential and it is accessible only
to the management. In most cases, small enterprises do not use internal

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accounting at all due to their size. Internal accounting is normally not governed
by national legislation. However, in some Member States internal accounting is
compulsory even for small enterprises.
2. External accounting
External accounting, also called financial accounting is concerned with the
preparation of financial statements for decision makers, such as the owners,
suppliers, banks, governments and its agencies, customers and other
stakeholders outside the enterprise. Regarding formats for financial statements
see chapter 7. External accounting makes use of the accounting information
from the internal accounting system. In the preparation of the external
accounting, the small enterprise may be governed by local GAAP. Some
Member States have introduced external accounting rules for small enterprises,
while others have no accounting rules in place and leave it to the enterprises
themselves to decide which accounting systems they consider to be appropriate
for their particular circumstances and business environment.

3. Tax accounting

Tax accounting is normally based on the external/financial accounting system.

There may be differences between the profits for tax purposes and the profits per
the accounts. Tax authorities often ask for additional adjustments to be made to
the profits per the accounts and these are captured in a "tax computation". Some
examples of adjustments which are quite common between profits per accounts
and tax profits:

• Depreciation differences

• Accruals

• Expenses which are disallowed for tax purposes

• Non-taxable income

In some Member States, taxation is carried out on a cash basis accounting

system, in which case further adjustments (when the enterprise uses accrual
basis accounting) like accruals, unrealised income and unrealised expenses are
to be made to the enterprise’s results before the tax computation.

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V. conclusion

The accounting information system is a very integrate system. A company needs

to follow the correct steps when using the Strategic mode so that the business
does not fail from the huge makeover that it may be receiving from the Strategic
mode. Also making sure that a company has a contingency plan set in place will
help make sure that the company won’t fail if there is a disaster of some sort.
The company should also make sure that it is in compliance with the Sarbanes-
Oxley Act of 2002.