What is Accounting?

What is Accounting?

Accounting, sometimes referred to as accountancy  can be defined as a systematic process of measuring, processing, interpreting and communicating financial and non financial information about businesses and corporations to the end users for decision making. The modern field of Accounting was established in 1494 by the Italian mathematician named Luca Pacioli. 

Accounting is often called the "language of business", because it measures the results of the economic activities of an organization and the information will be conveyed to a variety of users, including bankers, investors, government, tax collectors creditors, management, etc.

People who practice accounting are called ACCOUNTANTS. Often times, "accounting" and "financial reporting" are used as synonyms, although there are few difference.

There are several fields involved in accounting. They are; financial accounting, management accounting, auditing, taxation, cost accounting, public accounting. The aim of the Accounting information systems are to support accounting functions and activities relating to it.

Financial Accounting also focuses on reporting the financial information of an organization, including the preparation of financial statements, to the external users, such as investors, regulators and suppliers; while management accounting focuses on measuring, analysing and reporting of information for internal. Bookkeeping is the recording of financial transactions, so that summaries of the details may be presented in financial reports, The double-entry bookkeeping is the most common system in bookkeeping.

Accounting is controlled by organizations such as standard-setters, accounting firms and professional bodies. Financial statements of an organization are usually audited by accounting firms, they are called Auditors and are prepared inline with generally accepted accounting principles (GAAP). GAAP is set by various standard-setting organizations. Some of them are the Financial Accounting Standards Board (FASB) which controls the United States and the Financial Reporting Council (FRC) in the United Kingdom, The Financial Reporting council of Nigeria (FRCN) in Nigeria, etc. As at 2012, "all major economies of the world" have plans to adopt the International Financial Reporting Standards (IFRS).
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