Definition and origin of accounting

1. Introduction

Accounting is defined as a system adapted to classify the economic events that occur in a business. In such a way that it becomes the central axis to carry out the various procedures that will lead to obtaining the maximum economic return that implies establishing a specific company.

So, this work contains an introductory vision around the historical review of accounting, its definition, objectives, importance, bookkeeping, difference between it and accounting and accounting principles and procedures, among other aspects related to topic treated.

In general, it is expected that, as students of the Chair of Accounting, a first contact will be made with the basic knowledge required for effective performance in it.

2. Origin of accounting

Accounting dates back to very ancient times, when man was forced to keep records and controls of his properties because his memory was not enough to store the required information. It has been shown through various historians that in times such as the Egyptian or Roman, accounting techniques that were derived from commercial exchange were used.

The beginning of accounting literature is limited to the work of the Franciscan Fray Luca Paccioli of 1494 entitled "The Summa of Arithmetic, Geometry Proportioni et Proportionalitá", where the concept of double entry is considered for the first time.

Currently, within what are business information systems, accounting stands as one of the most notable and effective systems to publicize the various areas of information of production units or companies. The concept has evolved greatly, so that the degree of "specialization" of this discipline within the business environment is increasing.

3. Definition

Accounting is a technique that deals with recording, classifying and summarizing the business operations of a business in order to interpret its results. Consequently, managers or directors through accounting will be able to orient themselves on the course that their businesses follow using accounting and statistical data. These data allow to know the stability and solvency of the company, the current of collections and payments, the trends of sales, costs and general expenses, among others. So that the financial capacity of the company can be known.

4. Accounting objectives

Provide information to: Owners, shareholders, banks and managers, regarding the nature of the value of the things that the business owes to third parties, the things owned by the business. However, its primary objective is to provide reasoned information, based on technical records, of the operations carried out by a private or public entity. To do this you must:

Records based on technical systems and procedures adapted to the diversity of operations that a given entity may carry out. Classify registered operations as a means to obtain proposed objectives. Interpret the results in order to provide detailed and reasoned information.

Regarding the information provided, it must meet an administrative and a financial objective:

Administrative: Offer information to internal users to supply and facilitate intrinsic administration planning, decision making and control of operations. For this, it includes present and future historical information of each department in which the organization of the company is subdivided.

Financial: provide information to external users of the operations carried out by an entity, fundamentally in the past for what is also called historical accounting.

5. Importance of accounting

Accounting is of great importance because all companies have a need to keep track of their business and financial negotiations. This way you will obtain greater productivity and use of your assets. On the other hand, the services provided by accounting are essential to obtain legal information.

6. Bookkeeping

Bookkeeping is understood as the routine process of registering, classifying and summarizing the information of each of the transactions carried out by the company. Consequently, annotations can be kept as clearly and clearly as possible.

7. Differences between accounting and bookkeeping

Accounting is responsible for:

Analyze and evaluate the economic results. Group and compare results. Plan and synthesize the procedures to be followed. Control the fulfillment of the programmed.

Meanwhile, bookkeeping deals with:

Collect, record and classify company operations. Narrate in writing the accounting facts. Execute tasks according to pre-established procedures. It is under the control and supervision of the accountant.

8. Accounting principles and procedures

Accounting Principles:

Accounting principles refer to basic concepts or sets of directive propositions to which all subsequent development must be subordinated. Its mission is to establish limits on economic entities, the bases for the quantification of operations and the presentation of financial information.

The accounting principles were established to be applied to the so-called financial accounting and, by extension, they are also usually applied to administrative accounting. Administrative accounting will be planned according to the needs or preferences of each company, which may impose its own regulations. Financial accounting should be planned to provide quantitative, comparative, and reliable information to its external users.

Accounting Procedures:

Records management constitutes a phase or procedure of accounting. Record keeping is an extremely important process, since the efficient development of other accounting activities depends to a large degree on the accuracy and integrity of accounting records.

According to HA Finney (1982, p.13-24) he expresses in his book "Accounting Course" that the accounting procedures are:

Accounts Debits and credits Charges and credits to accounts Asset accounts Liability and capital accounts Summary of the operation of debits and credits Records of operations Accounts receivable and payable The newspaper and the bulk Wholesale passes Determination of account balances The trial balance

9. Relationship of accounting with other disciplines

Accounting has various books that are essential for any company which are:

Daily Inventory Major

There are also the so-called "Auxiliary Books" such as the Book of

Caja, the Sales Auxiliary Journal, the Current Accounts Journal, Documents Payable, Banks, Etc.

10. Articles of the commercial code and the income tax law related to commercial accounting.

Article 32. - All merchants must keep their accounting in Spanish, which will include, necessarily, the Daily Book, the General Ledger and the Inventory Book.

Article 33. - The Daily Book and the Inventory Book cannot be put into use without having been previously presented to the Commercial Court or Registrar, in the places where there are, or to the ordinary Judge of the highest category in the town where there are no such officials, in order to put on the first page of each book a note that it has, dated and signed by the Judge and its Secretary or by the Commercial Registrar. The Office Seal will be stamped on all other sheets.

Article 34. - In the Daily Book, the transactions made by the merchant will be recorded, day by day, so that each item clearly expresses who is the creditor and who is the debtor, in the negotiation to which it refers, or will be summarized monthly, at least, the totals of those operations provided that, in this case, all the documents that allow verifying all the operations are kept, day by day.

Article 35. - Every merchant, at the beginning of his business and at the end of each year, will make in the inventory book an estimative description of all his goods, both movable and immovable, and of all his credits, assets and liabilities, linked or not to your trade.

The inventory must be closed with the balance and the profit and loss account; This must demonstrate with evidence and truth the benefits obtained, as well as any other obligations contracted under suspensive condition with the annotation of the respective counterpart.

The inventories will be signed by all those interested in establishing the business that are present in their formation.

Article 38. - The books kept in accordance with the previous articles may test between merchants for acts of commerce. With respect to another person who is not a merchant, the entries in the books will only testify against their owner; but the other party cannot accept the favorable without also admitting the adverse that they contain.

11. Conclusion

Based on the bibliographic review carried out around the central theme of this work, Accounting, it can be concluded that, since memorable times, man has persisted in keeping an exhaustive control of all the financial movements that are carried out in his small, medium or big companies. Consequently, it has supported itself in various ways to achieve its end. Initially, it was carried out in very simple processes based on the approaches presented by the monk Fray Luca Paciolo, however over time, technological progress and business demands, accounting processes and techniques have evolved.

Currently it can be affirmed that the process of counting and recording financial data is developed in a simpler and simpler way with the support of the accountant, but it must be clarified that the established principles continue to be applied to execute business accounting.