1. HISTORY & DEVELOPMENT OF ACCOUNTING
• Accountingis more than just the act of keeping a list
of debits and credits.
• It is the language of business and, by extension, the
language of all things financial.
• Our senses collect information from our surroundings that
our brains then interpret;
• Accountants translate the complexities of finance into
information that the public can understand.
2. What Are the Origins of Accounting?
• Bookkeepers emerged when societies used the barter system
and needed to record the agreements they were making
regarding goods or service transactions.
• Later accounting ledgers were completed by hand and used
either a single-entry or double-entry system.
• Luca Pacioli, a monk, laid the groundwork for modern
accounting creating independent records that provided a
clearer picture of a BUSINESS financial activities
• The railroads and the emergence of corporations were the
stimulus for the establishment of accounting professionals.
3.
4. The American Institute of
Certified Public
Accountants(AICPA)
is the non-profit professional
organization of certified
public accountants (CPA) in the
United States.
The American Accounting
Association (AAA) is an
organization that supports
accounting education, research,
and practice.
5. The Accounting Principles
Board (APB) was the
authoritative body of the
American Institute of
Certified Public Accountants
(AICPA) from 1959 until 1973.
It was replaced in 1973 by the
Financial Accounting
Standards Board (FASB).
The Accounting Principles
Board (APB) was a group
that issued authoritative pronounce
ments about
accounting theory and the practical
application of accounting.
According to the Accounting Principles Board of AICPA
Function of Accounting is
to provide quantitative information,primarily in
financial nature, about economic entities,
(Business) that is intended to be useful in making economic
decisions.
6.
7. ECONOMIC EVENTS
In accounting, an economic event is
referred to as Transaction
Transaction in any business is an
event that impacts the account
balances( MONEY/CASH/BANK)
8. Event Transaction
(1) All events are not transactions. (1) All transactions are events.
(2) An event may or may not bring change in the financial position of a person, family,
or organization.
(2) An event must bring financial change.
(3) Financial changes caused by events may or may not be measurable in terms of
money.
For example, the death of a skilled employee may bring heavy loss to a business, but
this loss is not measurable in terms of money.
(3) The financial changes caused by transactions must be measurable in terms of
money.
(4) Events are used in a wider sense.
It may or may not require two parties for the occurrence of an event.
(4) Transactions are used comparatively in a narrow sense.
In the case of transaction two parties are must.
(5) Transfer of goods or services may or may not occur for an event. (5) As a consequence of transactions transfer of goods or service is a must.
Of course, in some cases, there is an exception. For example, burning of goods, fixed
asset depreciation etc.
(6) It is. not necessary that every event will be recorded in the books of accounts.
It is needless to record any event in the books of accounts if it is not measurable in
terms of money.
(6) Every transaction must be recorded in the books of accounts; otherwise accurate
results cannot be ascertained from the books of accounts.
(7) Transaction relating event is settled for cash. (7) Financial transactions may be settled in Cash or are made on credit.
(8) As per accounting principle of events—
(a) Cash statement.
(b) Separate statements for receipts and payments head wise and,
(c) Final statement of receipts and payments are made.
(8) In the accounting process of the transaction in the first phase journalizing, in the
second phase posting in the ledger and in the third phase financial statement is
prepared.
(9) The scope of the event is very wide. (9) The scope of the transaction is limited.
(10) The scope of the event is very wide. (10) The scope of the transaction is limited.
(11) Transactions related to events are not always supported by evidence. (11) Business transactions must be supported by evidence.
Difference between Event and Transaction
9. TRANSACTION VS EVENTS
All transactions are
events, but all events
are not transactions
because to become a
transaction, an event
must be of financial
nature.
The transaction is
nothing but business
activity, that can be
expressed in monetary
terms, while an event
is just the ultimate
result of the
transaction.