This document discusses the history and purpose of accounting. It notes that accounting originated in India thousands of years ago as described in the book "Arthashastra," and the modern double-entry system was first published by Luca Pacioli in 1494. The document defines accounting as recording, classifying, and summarizing financial information and transactions to facilitate decision making about a business. It outlines the objectives of accounting as maintaining records, meeting legal requirements, protecting assets, facilitating decisions, and communicating results to stakeholders.

1. Dr. THULASI KRISHNA. K
Dept. of Management Sciences,
MITS, Madanapalle, A.P.

2.  In India, the system of Accounting was practiced centuries
ago as it is clear from the book named “Artha sasthra”
written by Koutilya, Chandra Gupta’s minister.
 Kautilya’s Arthshastra covers accounting principles and
standards, role and responsibilities of accountants and
auditors, the methodology of accounting, auditing
and fraud risk management, and the role of ethics in
managing financial activities.

3.  The modern system of accounting based on the principles
of double entry system owes its origin to ‘Fra Luca Pacioli’
(Father of Accounting) who first published the principles
of double entry system in 1494 at Venice in Italy.

4.  Accounting is a discipline which records, classifies,
summarises and interprets financial information about the
activities of a concern so that intelligent decisions can be
made about the concern.
 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.
……. American Institute of Certified Public Accountants

5.  Accounting is a process;
 It is an art;
 It is a means and not an end;
 It deals with financial information and transactions; and
 It is an information system

6.  To keep a systematic record of business transactions;
 To ascertain the results of the operation;
 To determine the financial position of the business;
 To portray the liquidity position;
 To protect business properties;
 To facilitate rational decision – making; and
 To satisfy the requirements of law:

7.  It keeps a systematic permanent written record of
business transactions of the organization.
 It maintains a record of assets and liabilities.
 It provides information for meeting various legal
requirements such as I.T returns, Sales tax returns, etc.
 It communicates the results of the business to the various
categories of persons such as owners, creditors, Govt., etc.
 It protects the property of the business.
 It helps in managerial decision making.
 It helps in optimum utilisation of resources.

8. • Owners
• Management
Internal Users • Employees
• Investors
• Creditors
• Customers
• Government
• Researchers
External Users

9.  Maintaining systematic records
 Meeting legal requirements
 Protecting and safeguarding business assets
 Facilitates rational decision-making
 Communicating and reporting
 Comparison of results
 Decision making

10. • Deals with the preparation of financial
statements to provide information to the
interested parties.
Financial
Accounting
• Provides the detailed cost information
that management needs to control
current operations and plan for the
future
Cost Accounting
• Deals with the presentation of
accounting information is such a way as
to assist management in the creation of
policy and the day-to-day operation of an
undertaking
Management
Accounting