3. Accounting is 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.
4. • We need accounting because it is the backbone of
business finances. It was created in response to the
development of trade in medieval times. The first
recorded source of accounting entries was in Italy in
1494 by Luca Pacioli, a Franciscan monk.
• It is simply not for providing information to tax
authorities and government agencies but to identify
and record all the activities that impact an
organization in a financial manner.
• It is also useful for the employees and
customers in order to know the condition of the
business entity.
5. Owners
Potential Investors: Those who want to invest in
an enterprise.
Creditors: Who supply goods or services on
credit.
Employees: To assess ability of business to pay
higher wages and bonuses.
Public: To know trend of employment, helps in
making various decisions.
Researchers: Who wants to make in depth study
of financial operations.
Government: For assessment of income tax, sales
tax, excise duty etc.
