CHAPTER 1 Flashcards
_________ is as old as civilization itself.
-started as a simple recording of repetitive exchanges
Accounting
The ______________ is often seen as indistinguishable from the history of finance and business.
history of accounting
was already common from Mesopotamia, China and India to Central and South America.
record-keeping
The oldest evidence of this practice was the “____________“of Mesopotamia which dealt with commercial transactions at the time such as listing of accounts receivable and accounts payable.
“clay tablet”
Around 3600 B.C., record-keeping was already common from Mesopotamia, China and India to Central and South America. The oldest evidence of this practice was the “clay tablet” of Mesopotamia which dealt with commercial transactions at the time such as listing of accounts receivable and accounts payable.
The Cradle of Civilization
The most important event in accounting history is generally considered to be the dissemination of double entry bookkeeping by ___________
Luca Pacioli
(‘The Father of Accounting’) in 14th century Italy.
Luca Pacioli
Luca Pacioli wrote ______________, the first book published that contained a detailed chapter on double-entry bookkeeping.
Summa de Arithmetica
The most important event in accounting history is generally considered to be the dissemination of double entry bookkeeping by Luca Pacioli (‘The Father of Accounting’) in 14th century Italy. Pacioli was much revered in his day, and was a friend and contemporary of Leonardo da Vinci. The Italians of the 14th to 16th centuries are widely acknowledged as the fathers of modern accounting and were the first to commonly use Arabic numerals, rather than Roman, for tracking business accounts. Luca Pacioli wrote Summa de Arithmetica, the first book published that contained a detailed chapter on double-entry bookkeeping.
14th Century - Double-Entry Bookkeeping
The thorough study of accounting and development of accounting theory began during this period. Social upheavals affecting government, finances, laws, customs and business had greatly influenced the development of accounting.
French Revolution (1700s)
Mass production and the great importance of fixed assets were given attention during this period.
The Industrial Revolution (1760-1830)
The modern, formal accounting profession emerged in Scotland in 1854 when Queen Victoria granted a Royal Charter to the Institute of Accountants in Glasgow, creating the profession of the Chartered Accountant (CA).
19th Century – The Beginnings of Modern Accounting in Europe and America
In the late 1800s, ______________ from Scotland and Britain came to the U.S. to audit British investments. Some of these accountants stayed in the U.S., setting up accounting practices and becoming the origins of several U.S. accounting firms.
chartered accountants
. The first national U.S. accounting society was set up in _____.
1887
A _______ is when one company takes over all the operations of another business entity resulting in the dissolution of another business.
merger
Businesses expanded by ____________
acquiring other companies
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.
-An information system that measures, processes and communicates financial information about an economic entity.
-The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information.
-The art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof.
-often called the “Language of business.”
-It is a means of communicating information about a business. Its responsibility is applying a thorough knowledge of the theory of accounting, that is, generally accepted principles of accounting to the practical field of business in order that income and financial position may be stated fairly.
-is the analysis and interpretation of bookkeeping records. It includes not only maintenance of accounting records but also the preparation of financial and economical information which involves the measurement of transaction and other events pertaining to a business.
Accounting
Accounting is often called the “_______________”
“Language of the business”
Users of accounting information are also called as _________________
stakeholders of financial statements.
___________ include owners, managers and other employees who use financial information to confirm past results and help make adjustments for future activities.
Internal users
They need the information to evaluate the financial status and performance of the business and guide them on what future course of action to take appropriately for improvement.
Managers
They want the information to determine whether the business, as their employer, has the ability to provide the benefits they need. They also want to know how stable the company is and if they can have a long-term engagement with it.
Employees
