BASICS OF ACCOUNTANCY

Meaning of Accountancy

Accountancy is the process of identifying, measuring, recording and communicating the required financial information in an organization to the interested users in need of such information. In other words it is simply an exchange of Financial matters is specified in a paper for future or personal reference.

Definition

According to the American Institute of Certified Public Accountants (AICPA) “Accountancy is the art of recording, classifying, and summarizing in a significant manner and in terms of money”

History of Accountancy

It is proved that the Accountancy had been existed before 2600 B.C, as it the stage of Exchange of goods and services for the Goods and services it is known as Barter System. The Barter System is the basis of Accountancy. Later on the money economy the credit shaped transactions took place.

In development of trade commerce the importance of accountancy had been grew its importance particularly in between the years 1930 to 1950. The systematic method of arrangement of financial data (account – keeping) had developed initially in Geneva and Venice.

The Indian “KAUTILYA’S ARTHASHASTRA”, written in 4^th century B.C. not only describes about the politics and economics. It deals the importance of maintain the account – keeping. Kautilya had devoted the entire chapter to the business of keeping the accounts in the office of the Accountant.

Entry of book keeping

At initially the book- keeping is done by single entry but after 1940, LUCA DE BARGO PACIOLI wrote SUMMA in which he introduced the Double entry system, it is noted that it is the first publication on double entry system of bookkeeping hence LUCA DE BARGO PACIOLI is considered as Father of modern double entry system. The book SUMMA is First published in Venice but later on it is translated to English by publishers named HUGE OLD CASTLE in 1953.