Accounting is the process of giving people information about the finance of an organisation and is often referred to as the language of business because the information provided is generally in a consistent format and is based on generally accepted principals. The information is made up of the two key pieces of financial information. The first is a profit and loss (P&L) account, showing the performance of an organisation creating, or, perhaps, destroying, wealth. Usually, this is produced annually. However, a P&L can be produced for any time frame that suits the organisation, provided it shows information that s useful. The second is the Balance sheet, which gives information about the resources being controlled by the organisation n terms of assets, liabilities and capital employed. Again, this is usually produced annually and is of interest to the management and investors alike.
Accountancy, as a process is probably over 7,000 years old. The earliest records showing some form of 'counting' were found in Mesopotamia, showing the Assyrian civilization had developed a way of measuring their wealth. The current accountancy system using double-entry book-keeping,is believed to have been developed in Northern Italy in the 14th century, as trading expanded and became more sophisticated, with banking and the borrowing and lending of money becoming accepted.
A Corporation is another name for a Company. A Company is an entity that carries on some form of trade or profession. It is usually an entity with Limited Liability, also known as Joint Stock Companies, in that investors put up funds to start the business, and gain a reward should the business be successful. However, if the Company is not successful and goes bankrupt, the investors lose only the funds they invested initially, and are not liable for all the debts of the Company, unless fraud is involved. The investors may be involved in the business, or the leave managers to run it.
This development also changed accountancy, with the need for two types of information to be developed. The first is management accounts required to keep the operators of the business informed of what is going on on a day-to-day basis. The second is financial accounting, providing information to investors and shareholders, the general public and regulatory authorities.
Accountancy, as a process is probably over 7,000 years old. The earliest records showing some form of 'counting' were found in Mesopotamia, showing the Assyrian civilization had developed a way of measuring their wealth. The current accountancy system using double-entry book-keeping,is believed to have been developed in Northern Italy in the 14th century, as trading expanded and became more sophisticated, with banking and the borrowing and lending of money becoming accepted.
A Corporation is another name for a Company. A Company is an entity that carries on some form of trade or profession. It is usually an entity with Limited Liability, also known as Joint Stock Companies, in that investors put up funds to start the business, and gain a reward should the business be successful. However, if the Company is not successful and goes bankrupt, the investors lose only the funds they invested initially, and are not liable for all the debts of the Company, unless fraud is involved. The investors may be involved in the business, or the leave managers to run it.
This development also changed accountancy, with the need for two types of information to be developed. The first is management accounts required to keep the operators of the business informed of what is going on on a day-to-day basis. The second is financial accounting, providing information to investors and shareholders, the general public and regulatory authorities.
