![]() A Brief History of AccountingĪccounting was born before writing or numbers existed, some 10,000 years ago, in the area known as Mesopotamia, later Persia, and today the countries of Iran and Iraq. Sales are typically made in a similar fashion, called Accounts Receivable. Businesses usually purchase their supplies and merchandise on aģ0-day account, known as a trade account, or Accounts Payable. Many, and perhaps most, transactions in a business take place on a credit basis. Marble tablet: Account of Disbursements of the Athenian State c. These are all considered part of the Cash account. ![]() It is more common, and safer, to use a checking account for routine purchases. (Adjusting and closing entries are an exception and not typical, and represent special entries made by accountants to prepare financial statements, and reset certain accounts at the end of a fiscal year.) Sometimes a transaction involves cash directly, at the time of the event, such as a cash sale at a grocery store. Money eventually changes hands in almost all transactions, either at the time of the transaction, or perhaps at a future date in the case of items purchased on credit. ![]() the source of payment – cash or credit.the object of the transaction – such as rent, telephone, or payroll expense sales, fee or interest revenue.Refers to the left column and credit refers to the right column, in an accounting journal. The practice of recording a business transaction in two equal parts, called debit and credit entries. Of a business, government or other financial entity.ĭouble-entry bookkeeping: n. The people, procedures, and resources used to gather, record, classify, summarize and report the financial information A group of interacting, interrelated, or interdependent elements forming a complex whole.Īccounting System: n. The bookkeeping methods involved in making a financial record of business transactions and in the preparation of statementsĬoncerning the assets, liabilities, and operating results of a business. These are recorded and reported on using a comprehensive set of guidelines, referred to as Generally Accepted Accounting Principles (GAAP).Īccounting: n. Billions of dollars exchange hands every day, in millions of separate business transactions. Accounting is a profession used to make financial and business decisions.
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