Accounting Invention ITM Executive MBA, Batch 13B, Term 1 Presentation by Vijay Poojari KH08JUNMBA110
What is Accounts? <ul><li>Accounts is basically, the way to record the transaction of expenses, income, assets and liabilities etc. normally this is either done by cash or mercantile (barter) system. There are 3 types of accounts i.e. Real, Personal & Nominal. As the transaction of the entity increases the complexity of the recording of such transactions also become comprehensive and logical. </li></ul>
History of Accounts. <ul><li>Accounts is as older as the evolution of man and science vis-a-vis the trade. In olden days the account was there but in the form of Barter Exchange system. Later the man started easy way of exchange using the valuable metals as the medium of exchange then the currency note and so on. To have improve and efficient way of commercialization. </li></ul>
Who Invented Accounting? <ul><li>Frater Luca Bartolomes Pacioli (1445 - 1517 ) </li></ul><ul><li>Also known as “Father of Accounting” </li></ul><ul><li>Was born about 1445 at Borgo San Sepulcro in Tuscany. He was a "Renaissance man" in the true sense of the expression, acquiring an amazing knowledge of diverse technical subjects - religion, business, military science, mathematics, medicine, art, music, law and language. </li></ul>
Who Invented Accounting? Contd.. <ul><li>Pacioli was about 50 years old in 1494 - just two years after Columbus discovered America - when he returned to Venice for the publication of his fifth book, Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Everything About Arithmetic, Geometry and Proportion). It was written as a digest and guide to existing mathematical knowledge, and bookkeeping was only one of five topics covered. The Summa's 36 short chapters on bookkeeping, entitled De Computis et Scripturis (Of Reckonings and Writings) were added "in order that the subjects of the most gracious Duke of Urbino may have complete instructions in the conduct of business," and to "give the trader without delay information as to his assets and liabilities." (All quotes from the translation by J.B. Geijsbeek, Ancient Double Entry Bookkeeping: Lucas Pacioli's Treatise, 1914) </li></ul>
Double Entry System <ul><li>Paciolo thus made no claim to the invention of the double entry system, but its inclusion in his book has resulted in his being generally recognized as the author of the first published double entry bookkeeping text. </li></ul><ul><li>Benedetto Cotrugli is believed to have written the first double entry bookkeeping book in 1458. It and other hand written manuscripts seem to have circulated in the Italian city states during the 15th century. Cotrugli's book was not published until 1573 so Paciolo may claim the first published text. Hatfield wrote "it is seldom the case that a first book on a subject has so dominated its literature as was the case with Paciolo's De Computis et Scripturis . </li></ul>
Trail Balance <ul><li>The trial balance (summa summarium) is the end of Pacioli's accounting cycle. Debit amounts from the old ledger are listed on the left side of the balance sheet and credits on the right. If the two totals equal, the old ledger is considered balanced. If not, says Pacioli, "that would indicate a mistake in your Ledger, which mistake you will have to look for diligently with the industry and intelligence God gave you." </li></ul>
Accounting In Modern Generation <ul><li>In Modern Era, Accounting plays a major role in showing the financial position of the business and has also become necessity, for eg; Company has to declare the accounting profits for the relevent Assessment year, An Individual has to file the returns, Trust’s are also required to get there accounts Audited and so on. </li></ul>
Accounts - Productive / Time Consuming? <ul><li>Many people term it as non productive because it does not give any cash inflow to the organisation. But many term it as a part of good planning process as at a given time if properly planned, one will end up planning the better returns and proper tax planning. </li></ul>
What if no Accounts? <ul><li>It seems to be an illogical question, but can it happen? If yes then there would be no development and so on.. </li></ul>
Special thanks to Prof. Hardik Mehta Thank You
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