What is Accounting?
Definition
The principles and practice of systematically recording, presenting, and interpreting financial accounts; financial record keeping and management of businesses and other organizations, from balance sheets to policy decisions, for tax or operating purposes. Forms of inflation accounting, such as CCA (current cost accounting) and CPP (current purchasing power), are aimed at providing valid financial comparisons over a period in which money values change.
Meaning:
Keeping records of business transactions, including summaries of assets and liabilities. The first examples of writing, and hence the first historical accounts, were found in Sumer and other areas of Mesopotamia in the 4th millennium BCE. These consisted of cuneiform characters engraved on clay tablets used for bookkeeping purposes in business transactions. From that time until the 15th century, accounting techniques were rudimentary, using basic listings, usually in chronological or geographical order, of business inputs and outputs, purchases, inventories, and other transactions all listed together. In 1494, the Franciscan Friar Luca Pacioli published the mathematics textbook Summa de arithmetica, geometrica, proportioni et proportionalita (Venice, 1494). Although this book contained mathematics as known in the 15th century, one chapter described the method used by Venetian merchants that we now call double-entry bookkeeping. Pacioli also wrote about the recording of receivables and inventories, income, expense accounts, the year-end closing of ledgers, balanced accounts, and other methods that we still use today. Indeed, some historians date the beginning of the modern age (and even the beginning of the Renaissance) from Pacioli’s treatise on accounting. Accountants have basically followed his precepts, with some modifications, for more than 500 years.
Metaphorically, the term takes on ethical and religious significance, as when one is told to balance one’s accounts of good and evil. In fact, this sentiment is depicted in Christian liturgical and popular art with St. Peter holding a key and a book, the latter with a record or account of good and evil deeds, the former, the key to heaven, which he will use based on the balancing of accounts (see the Bible, Matthew 16:13-21).
Source:
The Hutchinson Unabridged Encyclopedia with Atlas and Weather Guide