| Accountancy is used to communicate financial | | | | memory of the businessperson and the audience for |
| information on businesses and other users such as | | | | the account was the record keeper and the proprietor |
| managers and shareholders. This type of information is | | | | alone. There were many crude methods of accounting |
| usually in the form of financial statements. These | | | | which proved inadequate for the problems which were |
| financial statements will display in money terms the | | | | created by a business entity that involved multiple |
| economic resources which are under the control of | | | | investors. To address these problems, double-entry |
| the management. | | | | book-keeping emerged in northern Italy in the 14th |
| Accountancy is a branch of mathematical science, and | | | | century, at a time when trading ventures started to |
| is extremely useful when uncovering the causes of | | | | require more capital than a single individual could invest. |
| any failure and success in business. There are three | | | | Accounting today is known as "the language of |
| divisions of accountancy that are applied to businesses | | | | business "as it has become the vehicle for relaying |
| and these are book-keeping auditing and accounting. | | | | financial information about a business entity to many |
| The AICPA (American Institute of Certified Public | | | | different groups of people. |
| Accountants) has defined accounting as "The art of | | | | Management accounting is used to focus on people |
| recording, classifying, and summarizing in a significant | | | | inside a business entity, and is employed to provide |
| manner and in terms of money, transactions and | | | | information to auditors, owner-managers, managers, |
| events which are, in part at least, of financial character, | | | | and employees. Primarily it is concerned with providing |
| and interpreting the results thereof." | | | | a basis for making operating or management decisions. |
| The act of accounting is thousands of years old, and | | | | Financial accounting provides information to people |
| the earliest records of accountancy date back over | | | | outside the business entity such as creditors, potential |
| 7000 years and were found in the Middle East. It was | | | | shareholders, financial analysts government agencies, |
| shown that people from that time would use various | | | | and banks or vendors. The presentation of financial |
| accounting methods to record their number of herds | | | | accounts is very structured owing to the different |
| and the growth of their crops. Since then accounting | | | | needs and requirements of these different users, and |
| has evolved, and over the years accounting has | | | | also governed by many more rules than management |
| improved immensely as businesses advanced. | | | | accounting. |
| Many early accounts were mainly to enable the | | | | |