Accounting

Accounting is a service activity. Its function is to provide

quantitative information, primarily financial in nature,
about economic entities that is intended to be useful in
making economic decisions, and in making reasoned
choices among alternative courses of action. (Accounting
Standards Council)
 ACCOUNTING IS A SERVICE ACTIVITY
- accountants provides service activity, and the kind of
service that they provide to their clients is accounting.
Function of Accounting
 To provide quantitative information, primarily
financial in nature
- Revenue- how much does the company earns
- Expenses- the amounts of money that are being
sacrificed by the company for them to do business
transactions
- Revenue – Expenses = Net Income
- If the expenses of a company are greater that what
they earn then that what we call Net Loss.
ECONOMIC ENTITIES
- Accounting or the art of doing accounting is not only
limited to businesses, accounting can also be used in
non-profit entities such as churches or foundations
since those entities also need record-keeping and that
method of record-keeping can be provided by
accounting.
 - Accounting is intended to be useful in making
economic decisions.
NATURE OF ACCOUNTING
 Art
 Financial
 Process
 Information System
Accounting is an art because it is a designed process
that will give us an output.
Accounting is financial in nature because we are
talking about “how much”.
Accounting is a process, we do a step-by-step
procedure until we get to the end which is the
financial reports or financial statements.
Lastly, because of the vast amounts of data and
information that is available in accounting, because
it is a record-keeping methodology then accounting
is also regarded as an information system.

FUNCTIONS OF ACCOUNTING
- To provide quantitative information and make
economic decisions for company.
 Maintenance of systematic records.
 Financial results of an entity can be
communicated.
 Meeting legal requirements
  Protecting assets of a business
 Assistance to management
1.Maintenance of systematic records
- We need record-keeping methodologies we need to
keep those records and accounting is a very helpful
tool.
2.Financial Results of an entity can be
communicated
- Because of accounting it can give the owners of a
company what happened on the operations.
3.Meeting legal requirements
-taxation authorities and the securities of exchange
commission also needs financial information/s. For
us to meet those statutory requirements we can use
the art of accounting.
4.Protecting assets of a business
- we also protect the assets or the resources of a
business
- the assets of the reorder resources of a business can
be protected since we have a proper record-keeping
methodology so you can keep track of our resources.
5.Assistance to Management
- Accounting gives information about the operations
of an entity.
HISTORY OF ACCOUNTING
Accounting can be traced into ancient civilizations among
Egyptian tablet, hieroglyphics.
Accounting records dating back more than 7000 years have
been found in Mesopotamia
Other early accounting records were also found in the ruins
of ancient Babylon, Assyria, and Sumeria. When there is
civilization there is a big chance that there is trade,
commerce, merchants. Merchants needs record-keeping
and the art of record-keeping it is accounting already.
The Roman Empire had access to detailed financial
information as seen in “The Deeds of the Divine
Augustus”.
Records of cash, commodities and transactions were kept
by military personnel of the Roman army.
The Merchants during the Goryeo Dynasty of Korea kept
tracks of their businesses and trades through record-
keeping methodologies.

Luca Bartolomeo de Pacioli- FATHER OF

ACCOUNTING
- An Italian mathematician and Franciscan friar
- Summa de arithmetica, geometrica, proportioni et
proportionalita.
(translation: Summary of arithmetic, geometric,
proportions and proportionality) Published in 1494
Details of calculation and record describes the
accounting methods then in use among northern-
Italian merchants, including double-entry
bookkeeping, trial balances, balances sheets, and
various other tools still employed by professional
accountants.