Accounting

Origin and growth of Accounting

accounting is as old as money itself. However, the act of accounting was not as developed as it is today because in the early  stages of civilisation, the number of transcactions to be recorded was so small that each businessman was able to record and check for himself all his transactions.
Accounting was practised in India twenty-three centuries ago as is clear from the book named "Arthashastra" written by kautilya, king chandragupta's minister.
The modern system of accounting based on the principles of Double Entry System owes its origin to Luco Pacioli who first published the principles of Double Entry System in 1994 at Venice in Italy.

Need for Accounting

The main aim of  a business is to earn profit. for earning profit, a businessman will either purchase the goods in one market at a certain price and sell it in another market at higher price or will covert the raw give him some percentage of profit on cost of production. But  this may not be true in all cases . Sometimes it may happen that the goods purchased or produced may go out of  fashion and may be unsaleable simply because of depression in the market, or keen competition. He may be able to sell the goods either at a loss or at a  very small margin of profit.

Meaning of Book-keeping

Book- keeping is the art and science of recording, classifying and summarizing business transcations in money or money's worth accurately and systematically so that the businessman may be able to know his profit or loss  during a specified period and also his finanical position on a particular date.

Definition of Accounting

Accounting is " the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information".

Distinction Between Book-keeping and Accounting

Book-keeping is recording of the financial transactions of a business in a methodical manner so that information on any point in relation to them may be quickly obtained. A bookeeper may be responsible for keeping all the records of a business or only a minor segment such as maintenance of the customers' accounts in a departmental store. much of the work of a book-keeper  is clerical in a nature and can be accomplished through the use of mechanical and electronic equipment.
on the other hand, Accounting is primarlly concerned with the design of the system of records, the preparation of reports based on the recorded data, the interpretation of the reports and finally communicating the results of the interpretations to persons who are interested in such results. Accountants often direct and review the work of book-keepers but accountants must possess a much higher level of knowledge, conceptual understanding and analytical skill than is required of the book-keepers.