Dr. THULASI KRISHNA. K

Dept. of Management Studies,

MITS, Madanapalle, A.P.

In India, the system of Accounting was practiced centuries

ago as it is clear from the book named “Artha sasthra”

written by Koutilya, Chandra Gupta’s minister.

Kautilya’s Arthshastra covers accounting principles and

standards, role and responsibilities of accountants and

auditors, the methodology of accounting, auditing

and fraud risk management, and the role of ethics in

managing financial activities.

The modern system of accounting based on the principles

of double entry system owes its origin to ‘Fra Luca Pacioli’

(Father of Accounting) who first published the principles

of double entry system in 1494 at Venice in Italy.

Accounting is a discipline which records, classifies,

summarises and interprets financial information about the

activities of a concern so that intelligent decisions can be

made about the concern.

The art of recording, classifying, and summarizing in a

significant manner and in terms of money, transactions

and events which are, in part at least, of financial character,

and interpreting the results thereof.

……. American Institute of Certified Public Accountants

Accounting is a process;

It is an art;

It is a means and not an end;

It deals with financial information and transactions; and

It is an information system

To keep a systematic record of business transactions;

To ascertain the results of the operation;

To determine the financial position of the business;

To portray the liquidity position;

To protect business properties;

To facilitate rational decision – making; and

To satisfy the requirements of law:

It keeps a systematic permanent written record ofbusiness transactions of the organization.

It maintains a record of assets and liabilities.

It provides information for meeting various legalrequirements such as I.T returns, Sales tax returns, etc.

It communicates the results of the business to the variouscategories of persons such as owners, creditors, Govt., etc.

It protects the property of the business.

It helps in managerial decision making.

It helps in optimum utilisation of resources.

• Owners• Management• EmployeesInternal Users

• Investors• Creditors• Customers• Government• Researchers

External Users

Maintaining systematic records

Meeting legal requirements

Protecting and safeguarding business assets

Facilitates rational decision-making

Communicating and reporting

Comparison of results

Decision making

• Deals with the preparation of financialstatements to provide information to theinterested parties.

Financial

Accounting

• Provides the detailed cost informationthat management needs to controlcurrent operations and plan for thefuture

Cost Accounting

• Deals with the presentation ofaccounting information is such a way asto assist management in the creation ofpolicy and the day-to-day operation of anundertaking

Management

Accounting