DEFINE ACCOUNTING- Accounting is the systematic and comprehensive recording of financial

transactions pertaining to a business, and it also refers to the process of summarizing, analyzing
and reporting these transactions to oversight agencies and tax collection entities. Accounting is
one of the key functions for almost any business; it may be handled by a bookkeeper and
accountant at small firms or by sizable finance departments with dozens of employees at large
NATURE OF ACCOUNTING- This information is communicated to stakeholders of the
organization to help them in decision making. These Stakeholders include:
Managers- develops and implements systems for gathering, analyzing, verifying, and reporting
certain types of financial information.
Investors - is an entity that commits money to a venture with an expectation of generating a
return. The type of commitment made can be in many forms, such as a guarantee to pay
creditors, a loan, an equity investment, tangible assets, or even the contribution of labor.
Suppliers- is an entity that supplies goods and services to another organization. This entity is
part of the supply chain of a business, which may provide the bulk of the value contained within
its products.
Government agencies - is the process of recording, analyzing, classifying, summarizing
communicating and interpreting financial information about government in aggregate and in
detail reflecting transactions and other economic events involving the receipt, spending,
transfer, usability and disposition of assets and liabilities.
At the Federal level, agencies that accountants work for include:
Departments of Defense, Transportation, Treasury, and Agriculture.
Foreign Service.
Government Accountability Office (GAO)
Internal Revenue Service (IRS)

EmployeesYour small business needs positive employee relations to remain effective and
function as a team. All too often, accounting functions can seem cold and calculated, giving
employees the impression they don't count as much as dollars. Avoid this impression by setting
up employee-friendly accounting and sending your workers the message that you want to take
care of their wages and benefits as well as your bottom line.

The financial information captured by the accounting system is usually communicated through
reports called financial statements. Including:
Income Statements- An income statement is a financial statement that reports a
company's financial performance over a specific accounting period. Financial performance is
assessed by giving a summary of how the business incurs its revenues and expenses through
both operating and non-operating activities. It also shows the net profit or loss incurred over a
specific accounting period.
Balance Sheets- A balance sheet is a financial statement that summarizes a company's assets,
liabilities and shareholders' equity at a specific point in time. These three balance sheet
 segments give investors an idea as to what the company owns and owes, as well as the amount
invested by shareholders.
The balance sheet adheres to the following formula:
Assets = Liabilities + Shareholders' Equity
Cash Flow Statements- In financial accounting, a cash flow statement, also known
as statement of cash flows, is a financialstatement that shows how changes in balance sheet
accounts and income affect cash and cashequivalents, and breaks the analysis down to
operating, investing and financing activities.
FUNCTION OF ACCOUNTING IN BUSINESS- Accounting information allows business owners
to assess the efficiency and effectiveness of their business operations. Prepared financial
statements can be compared to industry standards or to a leading competitor to determine how
the small business is doing. Business owners may also use historical financial accounting
statements to create trends for analyzing and forecasting future sales.
HISTORY OF ACCOUNTING- The history of accounting or accountancy is thousands of years
old 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, countingand money and early auditing systems by the
ancient Egyptians and Babylonians.By the time of the Emperor Edrian Henio, the Roman
government had access to detailed financial information. In India Chanakya wrote a manuscript
similar to a financial management book, during the period of the Mauryan Empire. His book
"Arthashasthra" contains few detailed aspects of maintaining books of accounts for a Sovereign
State.The Italian Luca Pacioli, recognized as The Father of accounting and bookkeeping was the
first person to publish a work on double-entry bookkeeping, and introduced the field in Italy.
The modern profession of the chartered accountant originated in Scotland in the nineteenth
century. Accountants often belonged to the same associations as solicitors, who often offered
accounting services to their clients. Early modern accounting had similarities to today's forensic
accounting. Accounting began to transition into an organized profession in the nineteenth
century, with local professional bodies in England merging to form the Institute of Chartered
Accountants in England and Wales in 1880.