Both the words accounting and accountancy were in use in Great Britain by the mid-1800s, and are derived from the words accompting and accountantship used in the 18th century. In Middle English (used roughly between the 12th and the late 15th century) the verb "to account" had the form accounten, which was derived from the Old French word aconter, which is in turn related to the Vulgar Latin word computare, meaning "to reckon". The base of computare is putare, which "variously meant to prune, to purify, to correct an account, hence, to count or calculate, as well as to think."
The word "accountant" is derived from the French word compter, which is also derived from the Latin word computare. The word was formerly written in English as "accomptant", but in process of time the word, which was always pronounced by dropping the "p", became gradually changed both in pronunciation and in orthography to its present form.
Accounting and accountancy
Accounting has variously been defined as the keeping or preparation of the financial records of an entity, the analysis, verification and reporting of such records and "the principles and procedures of accounting"; it also refers to the job of being an accountant.
Accountancy refers to the occupation or profession of an accountant, particularly in British English.
Accounting affects the economy
Although financial accounting produces past-oriented reports, it is based on generally accepted accounting principles and generally accepted accounting practices compliant with International Financial Reporting Standards/US GAAP. In order to prepare the financial accounts/reports an entity has to comply with these GAAPs and gaaps. Which of these accounting practices and principles the board of directors choose at the start of the financial period and whatever changes in these generally accepted accounting principles and practices are implemented during the accounting period, affect the entity´s economy and affect the financial accounts (financial reports) prepared at the end of the financial period. When all entities implement the same change during the financial year as required by IFRS/US GAAP, then that affects the entire economy.
Main article: History of accounting
Early 19th-century ledger.
The history of accounting is thousands of years old and can be traced to ancient civilizations. The early development of accounting dates back to ancient Mesopotamia, and is closely related to developments in writing, counting and money; there is also evidence for early forms of bookkeeping in ancient Iran, and early auditing systems by the ancient Egyptians and Babylonians. By the time of the Emperor Augustus, the Roman government had access to detailed financial information.
Double-entry bookkeeping developed in medieval Europe, and accounting split into financial accounting and management accounting with the development of joint-stock companies. Accounting began to transition into an organized profession in the nineteenth century, with local professional bodies in England merging to form the Institute of Chartered Accountants in England and Wales in 1880.
Accounting has several subfields or subject areas, including financial accounting, management accounting, auditing, taxation and accounting information systems.
Main article: Financial accounting
Financial accounting is financial capital maintenance in either nominal monetary units (Historical Cost Accounting) during low and high inflation and deflation or units of constant purchasing power (Constant Purchasing Power Accounting) as required in IFRS during hyperinflation. Financial accounting focuses on the reporting of an organization's financial information to external users of the information, such as investors, regulators and suppliers either based…