ACCOUNTANCY
CHAPTER 1
NOTES
INTRODUCTION TO ACCOUNTANCY
Evolution of accounting:
“The history of accounting dates to ancient times. 1494, the Italian
mathematician Luca Pacioli wrote about the double entry system of
bookkeeping”
The name of his book is “Collection of arithmetic, geometry and
proportion”.
The book had a section of proportion and the recording which was
based on a double entry system of bookkeeping.
Pacioli used the terms “debit” & “credit,” which came for the lattin
word “debtor” & “creditor.”
It is the major development in accounting that took place during
industrial evolution in the 18th and 19th century.
Need for accounting:
Accounting provides valuable information for making informative
economies decisions for business.
It provides information to external and internal users of accounting
information.
It provides information about the net result of an enter price.
Bookkeeping:
Bookkeeping is the process of recording all financial transactions of a
business in a systematic and chronological manner. It is the first step
in the accounting process.
Features of Bookkeeping:
Systematic recording of transactions is important.
Based on source documents (bills, invoices, vouchers, etc.).
Records only financial transactions.
, Maintains complete and exact records.
Forms the foundation of accounting.
Helps prepare financial statements.
Characteristics of Bookkeeping:
Chronological recording of transactions.
Accurate and systematic processes.
Permanent records of business transactions are important.
Objective and factual.
Essential for preparing final accounts.
Help detect errors and fraud.
Relationship between bookkeeping:
Bookkeeping is a part of accounting. It is concerned mainly with
recording financial transactions.
Accounting begins where bookkeeping ends. It includes
classifying, summarizing, analyzing, and interpreting the recorded
information.
Bookkeeping provides the basic data required for accounting.
Both are interrelated because accurate accounting depends on
proper bookkeeping.
Bookkeeping is mainly concerned with recording, whereas
accounting is concerned with recording as well as analysis and
interpretation.
In simple words:
Bookkeeping → Recording of transactions → Accounting →
Analysis & interpretation of information.
Accountancy:
Meaning:
Accountancy is the systematic study and application of
accounting principles and practices. It is a broader field that
includes accounting, auditing, taxation, financial reporting, and related
activities.
Simple Definition:
CHAPTER 1
NOTES
INTRODUCTION TO ACCOUNTANCY
Evolution of accounting:
“The history of accounting dates to ancient times. 1494, the Italian
mathematician Luca Pacioli wrote about the double entry system of
bookkeeping”
The name of his book is “Collection of arithmetic, geometry and
proportion”.
The book had a section of proportion and the recording which was
based on a double entry system of bookkeeping.
Pacioli used the terms “debit” & “credit,” which came for the lattin
word “debtor” & “creditor.”
It is the major development in accounting that took place during
industrial evolution in the 18th and 19th century.
Need for accounting:
Accounting provides valuable information for making informative
economies decisions for business.
It provides information to external and internal users of accounting
information.
It provides information about the net result of an enter price.
Bookkeeping:
Bookkeeping is the process of recording all financial transactions of a
business in a systematic and chronological manner. It is the first step
in the accounting process.
Features of Bookkeeping:
Systematic recording of transactions is important.
Based on source documents (bills, invoices, vouchers, etc.).
Records only financial transactions.
, Maintains complete and exact records.
Forms the foundation of accounting.
Helps prepare financial statements.
Characteristics of Bookkeeping:
Chronological recording of transactions.
Accurate and systematic processes.
Permanent records of business transactions are important.
Objective and factual.
Essential for preparing final accounts.
Help detect errors and fraud.
Relationship between bookkeeping:
Bookkeeping is a part of accounting. It is concerned mainly with
recording financial transactions.
Accounting begins where bookkeeping ends. It includes
classifying, summarizing, analyzing, and interpreting the recorded
information.
Bookkeeping provides the basic data required for accounting.
Both are interrelated because accurate accounting depends on
proper bookkeeping.
Bookkeeping is mainly concerned with recording, whereas
accounting is concerned with recording as well as analysis and
interpretation.
In simple words:
Bookkeeping → Recording of transactions → Accounting →
Analysis & interpretation of information.
Accountancy:
Meaning:
Accountancy is the systematic study and application of
accounting principles and practices. It is a broader field that
includes accounting, auditing, taxation, financial reporting, and related
activities.
Simple Definition:
