Accounting or accounting is the measurement, processing, and communication of financial information about economic entities such as businesses and companies. The modern field was founded by Italian mathematician Luca Pacioli in 1494. Accounting, which has been called "business language", measures the results of the organization's economic activities and conveys this information to various users, including investors, creditors, management, and regulators. An accounting practitioner is known as an accountant. The terms "accounting" and "financial reporting" are often used as synonyms.
Accounting can be divided into several fields including financial accounting, management accounting, external auditing, tax accounting and cost accounting. Accounting information systems are designed to support accounting functions and related activities. Financial accounting focuses on reporting organizational financial information, including the preparation of financial statements, to external users of information, such as investors, regulators and suppliers; and management accounting focuses on measuring, analyzing and reporting information for internal use by management. Recording of financial transactions, so the financial summary can be presented in the financial statements, known as bookkeeping, where double-entry bookkeeping is the most common system.
Accounting is facilitated by accounting organizations such as standard regulators, accounting firms and professional bodies. The financial statements are usually audited by the accounting firm, and prepared in accordance with generally accepted accounting principles (GAAP). GAAP is governed by standard setting organizations such as the Financial Accounting Standards Board (FASB) in the United States and the Financial Reporting Board in the United Kingdom. In 2012, "all major economies" have plans to converge toward or adopt International Financial Reporting Standards (IFRS).
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Histori
The history of accounting is thousands of years 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; there is also evidence for early bookkeeping in ancient Iran, and an early audit system by ancient Egyptians and Babylon. In the time of Emperor Augustus, the Roman government had access to detailed financial information.
Double-entry bookkeeping was pioneered in the Jewish community in the medieval Middle East, and later developed in medieval Europe, and accounting is divided into financial accounting and management accounting with the development of joint-stock companies. The first work on a double-entry bookkeeping system was published in Italy, by Luca Pacioli. Accounting began to transition into an organized profession in the nineteenth century, with local professional bodies in England joining to form the Institute of Chartered Accountants in England and Wales in 1880.
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Etymology
Both the accounting and accounting words were used in England in the mid-1800s, and derived from the accompanying and accountant words used in the 18th century. In Central English (used sometime between the twelfth and late fifteenth centuries), the verb "to account" has an accounten form, which is derived from the ancient French word aconter >, which in turn is related to the vulgar Latin word computare , which means "to calculate". The computare base is putare , which is "a variety of ways to crop, refine, to repair accounts, therefore, to count or calculate, as well as to think."
The word "accountant" comes from the French word kompter , which also comes from Italian and Latin computare . The word was previously written in English as "obedient," but in the process of word time, which is always pronounced by dropping "p", gradually changes both in pronunciation and in orthography into its present form.
Accounting and accounting
Accounting has been defined as a storage or preparation of an entity's financial records, analysis, verification and reporting and "accounting principles and procedures"; it also refers to the work of being an accountant.
Accounting refers to the work or profession of the accountant, especially in English English.
Topic
Accounting has several subfields or areas of study, including financial accounting, management accounting, auditing, taxation, and accounting information systems.
Financial accounting
Financial accounting focuses on reporting organizational financial information to external users of information, such as investors, potential investors and creditors. It calculates and records business transactions and prepares financial statements for external users in accordance with generally accepted accounting principles (GAAP). GAAP, in turn, emerges from a broad agreement between accounting theory and practice, and changes over time to meet the needs of decision makers.
Financial accounting produces past-oriented reports - for example financial statements prepared in 2006 reporting performance in 2005 - on an annual or quarterly basis, generally about the organization as a whole.
This accounting branch is also studied as part of a board exam for qualification as an actuary. It is interesting to note that these two professionals, accountants and actuaries, have created culture as arrogance.
Management accounting
Management accounting focuses on measuring, analyzing and reporting information that can assist managers in making decisions to meet organizational goals. In management accounting, internal measurements and reports are based on a cost-benefit analysis, and are not required to follow generally accepted accounting principles (GAAP). In 2014 CIMA created Global Management Accounting Principles (GMAPs). The results of research from 20 countries on five continents, this principle aims to guide best practice in the discipline.
Management accounting produces future-oriented reports - for example the budget for 2006 prepared in 2005 - and reporting times vary widely. Such reports may include financial and nonfinancial information, and may, for example, focus on specific products and departments.
Audit
Audit is the verification of statements made by others about the results, and in the context of accounting it is "unbiased checks and evaluation of an organization's financial statements". Auditing is a systematic and conventional professional service.
Audits on financial statements aim to express or disprove opinions on financial statements. The auditor expresses an opinion on the fairness by which the financial statements present the financial position, results of operations, and cash flows of the entity, in accordance with generally accepted accounting principles (GAAP) and "in all material respects". An auditor is also required to identify the circumstances in which generally accepted accounting principles (GAAP) have not been consistently observed.
Accounting information system
The accounting information system is part of an organizational information system that focuses on the processing of accounting data. Many companies use artificial intelligence based information systems. The banking and financial industry uses AI as a fraud detection. The retail industry uses AI for customer service. AI is also used in the cybersecurity industry. It involves computer hardware and software systems and uses statistics and modeling.
Accounting tax
Tax accounting in the United States concentrates on the preparation, analysis and presentation of tax payments and tax returns. The US tax system requires the use of specific accounting principles for tax purposes that may differ from generally accepted accounting principles (GAAP) for financial reporting. The US tax law covers four basic forms of business ownership: sole proprietorships, partnerships, corporations, and limited liability companies. Company and personal income are taxed at different rates, both varying by income level and include marginal rates (taxed on each additional dollar of income) and average rate (defined as a percentage of overall revenue).
Organization
Professional agencies
Professional accounting bodies include the American Institute of Certified Public Accountants (AICPA) and 179 other members of the International Federation of Accountants (IFAC), including the Australian CPA, the Chartered Certified Accountants Association (ACCA) and the Institute of Chartered Accountants in England and Wales (ICAEW). Professional bodies for the accounting profession sub-sector also exist, such as the Chartered Institute of Management Accountants (CIMA). Many of these professional bodies offer education and training including qualifications and administration for various accounting appointments, such as certified public accountants and registered accountants.
Accounting firm
Depending on the size, the company may be legally required to have its financial statements audited by a qualified auditor, and audits are usually performed by the accounting firm.
Accounting firms grew up in the United States and Europe in the late nineteenth and early twentieth centuries, and through several mergers there were major international accounting firms in the mid-twentieth century. Further large mergers in the late twentieth century led to the dominance of the audit market by the accounting firm "Big Five": Arthur Andersen, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers. The death of Arthur Andersen after the Enron scandal reduced the Big Five to the Big Four.
Standard seter
Generally accepted accounting principles (GAAP) are accounting standards issued by national regulatory bodies. In addition, the International Accounting Standards Board (IASB) publishes International Financial Reporting Standards (IFRS) implemented by 147 countries. While standards for international audits and guarantees, ethics, education and public sector accounting are all governed by independent standards-setting boards supported by IFAC. The International Audit and Guarantee Standards Board establishes international standards for auditing, assurance, and quality control; The International Code of Ethics Standards for Accountants (IESBA) establishes a Code of Conduct for Professional Accounts that is based on internationally relevant principles The International Accounting Standards Board (IAESB) sets the standards for professional accounting education; The International Public Sector Accounting Standards Board (IPSASB) sets international accrual-based public accounting standards
Organizations in each country can issue unique accounting standards for these countries. For example, in the United States the Financial Accounting Standards Board (FASB) issues the Statement of Financial Accounting Standards, which forms the basis of US GAAP, and in the UK the Financial Reporting Board (FRC) sets accounting standards. However, in 2012 "all major economies" have plans to converge toward or adopt IFRS.
Education and qualifications
Accounting degree
At least a bachelor's degree in accounting or a related field is required for most accounting and auditor job positions, and some employers prefer applicants with a master's degree. A degree in accounting may also be required for, or may be used to qualify for, membership for professional accounting bodies. For example, education during an accounting degree may be used to meet the American Institute of CPA semester hours requirements (AICPA), and associate membership with the UK Certified Public Accountant Association is available upon obtaining a degree in finance or accounting.
Doctorate is required to pursue a career in accounting academics, for example to work as a university professor in accounting. The Doctor of Philosophy (PhD) and Doctor of Business Administration (DBA) are the most popular titles. The PhD is the most common degree for those who wish to pursue a career in the academic world, whereas DBA programs generally focus on equipping business executives to business or public careers who require research skills and qualifications.
Professional qualification
Professional accounting qualifications include the term Chartered Accountant and other qualifications including certificates and diplomas. In the UK, registered accountants from ICAEW undergo annual training, and are bound by ICAEW code of ethics and are subject to their disciplinary procedures. In the United States, the requirement to join AICPA as a Certified Public Accountant is determined by the Accounting Board of each state, and the members agree to comply with the AICPA Professional Codes and Domains. In India, the Apex Accounting Agency established by the Indian parliament is the "Institute of Certified Indian Accountants" (ICAI) known for its rigorous training and study methodology to provide Qualification. ACCA is the largest global accounting body with more than 320,000 members and organizations providing 'IFRS flow' and 'UK flow'. Students must pass a total of 14 exams, arranged in three papers.
Accounting research
Accounting research is a study in the effects of economic events on the accounting process, and the effects of information reported on economic events. It covers a wide range of research areas including financial accounting, management accounting, auditing and taxation.
Accounting research is done both by academic researchers and practicing accountants. The methodology in academic accounting research can be classified into archived research, which examines "objective data collected from the repository"; experimental research, which examines the data "researchers gathered by providing care to the subject"; and analytical research, which is "based on the action of formal modeling theory or reinforcing ideas in mathematical terms". This classification is incomplete; Other possible methodologies include the use of case studies, computer simulations and field research.
Empirical studies document that leading accounting journals publish in fewer research articles than comparable journals in economics and other business disciplines, and consequently, accounting scholars are relatively less successful in academic publishing than their business school counterparts. Because of the different levels of publication between accounting and other business disciplines, recent studies based on the rank of academic authors conclude that the competitive value of one publication in the top-ranked journal is the highest in accounting and the lowest in marketing.
Accounting information system
Many accounting practices have been simplified with the help of computer-based accounting software. Enterprise resource planning (ERP) systems are generally used for large organizations and provide integrated, centralized, integrated information resources that companies can use to manage all major business processes, from purchasing, manufacturing, to human resources.
The accounting information system has reduced the cost of collecting, storing, and reporting managerial accounting information and has made it possible to generate a more detailed account of all data entered into the given system.
Accounting scandal
2001 saw a series of financial information fraud involving Enron, audit firm Arthur Andersen, telecommunications company WorldCom, Qwest and Sunbeam, among other well-known companies. These issues highlight the need to review the effectiveness of accounting standards, audit rules and corporate governance principles. In some cases, management manipulates the figures shown in the financial statements to show better economic performance. On the other hand, tax and regulatory incentives encourage corporate over-leveraging and decisions to assume extraordinary and unjustified risks.
The Enron scandal greatly influences the development of new regulations to improve the reliability of financial reporting, and raises public awareness about the importance of having accounting standards that demonstrate the company's financial reality and the objectivity and independence of audit firms.
In addition to being the largest bankruptcy reorganization in American history, the Enron scandal is undoubtedly the biggest audit failure. This involved the financial scandal of Enron Corporation and their auditor Arthur Andersen, revealed in late 2001. The scandal led to the dissolution of Arthur Andersen, who was one of the five largest accounting firms in the world. After a series of revelations involving irregular accounting procedures conducted throughout the 1990s, Enron filed for Chapter 11 bankruptcy protection in December 2001.
One of the consequences of this event was the passage of the Sarbanes-Oxley Act in the United States of 2002, as a result of the first acceptance of the cheating behavior created by Enron. This action significantly increases criminal penalties for securities fraud, to destroy, alter or fabricate records in federal investigations or schemes or attempts to deceive shareholders.
See also
- Accounting records
References
External links
- The bibliography in your library and in other accounting libraries
- Operations Research in Accounting at the Institute of Operations Research and the Science Management website
Source of the article : Wikipedia
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